Categories: Wire Stories

Avid Technology Announces Q1 2022 Results

Subscription Revenue of $33.0M, an Increase of 32.5% Year-Over-Year, Driven by Net Increase of 21,200 Paid Subscriptions in the Quarter

Total Revenue of $100.6M, an Increase of 6.7% Year-Over-Year

Gross Margin of 66.3%, an Increase of 120 Basis Points Year-Over-Year

Net Income per Common Share of $0.23 and Non-GAAP Earnings per Share of $0.33, an Increase of 17.9% Year-Over-Year

BURLINGTON, Mass., May 04, 2022 (GLOBE NEWSWIRE) — Avid� (NASDAQ: AVID), a leading technology provider that powers the media and entertainment industry, today announced its financial results for the first quarter of 2022, which ended on March 31, 2022.

Total revenue increased 6.7% year-over-year in the first quarter, led by enterprise and creative subscription growth as well as favorable demand across product offerings, continuing the sustained growth trend with the fifth consecutive quarter of year-over-year revenue growth. During the first quarter, the recurring revenue components of the Company’s business remained strong with subscription revenue of $33.0 million, up 32.5% year-over-year, and subscription & maintenance revenue of $61.3 million, up 12.0% year-over-year.

The revenue growth, combined with improved gross margin, resulted in a 17.9% year-over-year improvement in Non-GAAP Earnings per Share to $0.33.

First Quarter 2022 Financial and Business Highlights

  • Subscription revenue was $33.0 million, an increase of 32.5% year-over-year.
  • Paid Cloud-enabled software subscriptions increased by 24.1% year-over-year to approximately 431,800 as of March 31, 2022, and increased by approximately 21,200 during the first quarter.
  • Subscription and Maintenance revenue was $61.3 million, up 12.0% year-over-year.
  • Total revenue was $100.6 million, an increase of 6.7% year-over-year.
  • Gross margin was 66.3%, an increase of 120 basis points year-over-year. Non-GAAP Gross Margin was 66.8%, an increase of 120 basis points year-over-year.
  • Operating expenses were $53.5 million, an increase of 5.1% year-over-year.   Non-GAAP Operating Expenses were $49.7 million, an increase of 7.4% year-over-year.
  • Net income was $10.6 million, an increase of 141.1% year-over-year. Non-GAAP Net Income was $14.8 million, an increase of 13.6% year-over-year.
  • Adjusted EBITDA was $19.3 million, an increase of 9.0% year-over-year. Adjusted EBITDA Margin was 19.2%, an increase of 50 basis points year-over-year.  
  • Net income per common share was $0.23, an increase of 130.0% year-over-year. Non-GAAP Earnings per Share was $0.33, an increase of 17.9% year-over-year.
  • Net cash provided by operating activities was $7.9 million in the quarter, a decrease of ($4.4) million compared to the prior year period due to working capital changes.
  • Free Cash Flow was $4.7 million in the quarter, a decrease of ($6.4) million compared to the prior year period due to working capital changes.
  • LTM Recurring Revenue % was 79.1% of the Company’s revenue for the 12 months ended March 31, 2022, up from 75.3% for the 12 months ended March 31, 2021.
  • Annual Contract Value was $339.0 million as of March 31, 2022, up 12.3% from $302.0 million as of March 31, 2021
  • Repurchased 354,472 shares for $10.8 million during the first quarter, under the $115 million share repurchase authorization announced on September 9, 2021.

Jeff Rosica, Avid’s CEO and President, stated, “We continued to have success growing our subscription business as more enterprise customers adopt subscription licensing coupled with continued strength in subscriptions for creative individuals. While we continue to see strong customer demand and business activity for our solutions, we have seen a tightening of supply for several components for our audio integrated solutions at the end of the first quarter that impacted our ability to meet customer orders, resulting in first quarter revenue at the lower end of our guidance.” Mr. Rosica added, “The global supply chain continues to present challenges, which could cause some uneven quarterly performance in the near-term. We currently believe these challenges to be temporary, and remain confident in our growing subscription and healthy maintenance business and in our ability to meet our 2022 targets. We’ve recently introduced several exciting new product enhancements for Pro Tools, Media Composer and MediaCentral, and in April, we added new pricing tiers for Pro Tools entry-level and high-end users, as we continue to execute on our subscription growth strategy.”

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 revenue during the first quarter. While we had strong customer demand for audio integrated solutions, we ended the quarter with about $10 million more integrated solutions backlog than typical because of tightening supply chain constraints late in the quarter. Notwithstanding these short-term challenges, we continue to feel confident in our business trajectory and our strategy for profitable growth. Consequently, we are not changing our full-year 2022 guidance.” Mr. Gayron continued, “Additionally, given our high confidence in our strategy and long-term model, and with the goal of enhancing shareholder returns, we continued to repurchase shares in the first quarter under the Company’s share repurchase program.”

Second Quarter and Full Year 2022 Guidance

For the second quarter of 2022, Avid is providing guidance for Revenue, Subscription & Maintenance Revenue, Non-GAAP Earnings per Share and Adjusted EBITDA. For the full year 2022, Avid is affirming its guidance for Revenue, Subscription & Maintenance Revenue, Non-GAAP Earnings per Share, Adjusted EBITDA and Free Cash Flow, that was issued on March 1, 2022.

   
($ in millions, except per share amounts) Q2 2022 Guidance
Revenue $92.0 – $104.0
Subscription & Maintenance Revenue $60.0 – $64.0
Non-GAAP Earnings per Share $0.19 – $0.32
Adjusted EBITDA $13.5 – $19.5
Q2 Non-GAAP Earnings per Share assumes 45.5 million shares outstanding.
   
  Full Year 2022 Guidance
Revenue $430 – $450
Subscription & Maintenance Revenue $266 – $274
Non-GAAP Earnings per Share $1.40 – $1.51
Adjusted EBITDA $84 – $94
Free Cash Flow $60 – $67
2022 Non-GAAP Earnings per Share assumes 46.2 million shares outstanding.

 

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 Q1 2022 Business Update presentation posted on Avid’s Investor Relations website at ir.avid.com.

Conference Call to Discuss First Quarter 2022 Results on May 4, 2022

Avid will host a conference call to discuss its financial results for the first quarter 2022 on Wednesday, May 4, 2022 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 15 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.

2022 Investor Day and Conference Participation

Avid will host an Investor Day on Tuesday, May 24, 2022, where our executive team will provide a detailed update of its business and strategy. The online event is open to all investors. Please visit the Events and Presentations page on ir.avid.com for event details and registration. The Investor Day presentation will also be available for a limited time on the Avid Investor Relations website shortly after the completion of the event.

In addition, members of our executive team will be participating in upcoming investor conferences. CEO Jeff Rosica will participate in a fireside chat at the 50th Annual J.P. Morgan Global Technology, Media and Communications Conference on Wednesday, May 25, 2022, at 2:30 pm ET. CFO Ken Gayron will participate in a fireside chat at the B. Riley 22nd Annual Institutional Investor Conference on Thursday, May 26, 2022, at 4:00 pm ET. Investors are invited to view the live webcasts of these sessions. Viewing details will be available at the events and presentations page of our investor relations website at ir.avid.com/events-and-presentations.

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, 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. 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: 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; our higher indebtedness and ability to service it and meet the obligations thereunder; 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; fluctuations in foreign currency exchange rates; seasonal factors; adverse changes in 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 30 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.

© 2022 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.          
Condensed Consolidated Statements of Operations          
(unaudited – in thousands, except per share data)          
    Three Months Ended March 31,  
      2022       2021    
           
Net revenues:          
Subscription   $ 32,954     $ 24,868    
Maintenance     28,327       29,852    
Integrated solutions and other     39,368       39,644    
Total net revenues     100,649       94,364    
           
Cost of revenues:          
Subscription     5,602       2,615    
Maintenance     5,277       5,574    
Integrated solutions and other     23,006       24,759    
Total cost of revenues     33,885       32,948    
           
Gross profit     66,764       61,416    
           
Operating expenses:          
Research and development     16,736       15,417    
Marketing and selling     21,927       20,744    
General and administrative     14,811       13,635    
Restructuring costs, net     15       1,074    
Total operating expenses     53,489       50,870    
           
Operating income     13,275       10,546    
           
Interest expense, net     (1,476 )     (2,118 )  
Other expense, net     (87 )     (3,555 )  
Income before income taxes     11,712       4,873    
           
Provision for income taxes     1,126       482    
Net income   $ 10,586     $ 4,391    
           
Net income per common share – basic   $ 0.24     $ 0.10    
Net income per common share – diluted   $ 0.23     $ 0.10    
           
Weighted-average common shares outstanding – basic     44,817       44,559    
Weighted-average common shares outstanding – diluted     45,408       46,204    
           
           
           
         
AVID TECHNOLOGY, INC.        
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures
(unaudited – in thousands)        
         
         
    Three Months Ended March 31,
      2022       2021  
GAAP Revenue        
GAAP Revenue   $ 100,649     $ 94,364  
         
Non-GAAP Gross Profit        
GAAP Gross Profit     66,764       61,416  
Stock-based compensation     426       440  
Non-GAAP Gross Profit   $ 67,190     $ 61,856  
GAAP Gross Margin     66.3 %     65.1 %
Non-GAAP Gross Margin     66.8 %     65.6 %
         
Non-GAAP Operating Expenses        
GAAP Operating Expenses     53,489       50,870  
Less Amortization of intangible assets     (58 )     (105 )
Less Stock-based compensation     (2,996 )     (2,977 )
Less Restructuring costs, net     (15 )     (1,074 )
Less Acquisition, integration and other costs     (459 )     (369 )
Less Efficiency program costs           (48 )
Less Digital Transformation Initiave     (243 )      
Less COVID-19 related expenses           (2 )
Non-GAAP Operating Expenses   $ 49,718     $ 46,295  
         
Non-GAAP Operating Income and Adjusted EBITDA        
GAAP net income     10,586       4,391  
Interest and other expense     1,563       5,673  
Provision for income taxes     1,126       482  
GAAP Operating Income     13,275       10,546  
Amortization of intangible assets     58       105  
Stock-based compensation     3,422       3,417  
Restructuring costs, net     15       1,074  
Acquisition, integration and other costs     459       369  
Efficiency program costs           48  
Digital Transformation Initiave     243        
COVID-19 related expenses           2  
Non-GAAP Operating Income   $ 17,472     $ 15,561  
Depreciation     1,803       2,119  
Adjusted EBITDA   $ 19,275     $ 17,680  
GAAP net income margin     10.5 %     4.7 %
Adjusted EBITDA Margin     19.2 %     18.7 %
         
Non-GAAP Net Income        
GAAP net income     10,586       4,391  
Amortization of intangible assets     58       105  
Stock-based compensation     3,422       3,417  
Restructuring costs, net     15       1,074  
Acquisition, integration and other costs     459       369  
Efficiency program costs           48  
Digital Transformation Initiave     243        
COVID-19 related expenses           2  
Loss on Extinguishment of debt           3,748  
Tax impact of non-GAAP adjustments     (3 )     (149 )
Non-GAAP Net Income   $ 14,780     $ 13,005  
Weighted-average share count (Basic)     44,817       44,559  
Weighted-average share count (Diluted)     45,408       46,204  
Non-GAAP Earnings per Share (Basic)   $ 0.33     $ 0.29  
Non-GAAP Earnings per Share (Diluted)   $ 0.33     $ 0.28  
         
Free Cash Flow        
Net cash provided by operating activities     7,916       12,313  
Capital expenditures     (3,244 )     (1,254 )
Free Cash Flow   $ 4,672     $ 11,059  
Free Cash Flow conversion from Adjusted EBITDA     24.2 %     62.6 %
         
         
         
         
AVID TECHNOLOGY, INC.        
Condensed Consolidated Balance Sheets        
(unaudited – in thousands)        
         
         
    March 31, 2022   December 31, 2021
Assets        
Current Assets        
Cash and Cash Equivalents   $ 41,245     $ 56,818  
Restricted Cash     2,013       2,416  
Accounts receivable, net of allowances of $1,298 and $1,456 at March 31, 2021 and December 31, 2021, respectively     57,410       77,046  
Inventories     17,817       19,922  
Prepaid Expenses     7,137       5,464  
Contract Assets     25,542       18,903  
Other Current Assets     1,896       1,953  
Total Current Assets     153,060       182,522  
         
Property and Equipment, Net     17,742       16,028  
Goodwill     32,643       32,643  
Right of Use Assets     23,242       24,143  
Deferred Tax Assets, Net     4,155       5,210  
Other Long-Term Assets     14,265       13,454  
Total Assets   $ 245,107     $ 274,000  
         
Liabilities and Stockholders’ Deficit        
Current Liabilities        
Accounts Payable   $ 21,380     $ 26,854  
Accrued Compensation and Benefits     26,821       35,458  
Accrued Expenses and Other Current Liabilities     36,457       37,552  
Income Taxes Payable     145       868  
Short-Term Debt     8,709       9,158  
Deferred Revenues     80,744       87,475  
Total Current Liabilities     174,256       197,365  
         
Long-Term Debt     160,889       160,806  
Long-Term Deferred Revenues     11,578       10,607  
Long-Term Lease Liabilities     22,673       23,379  
Other Long-Term Liabilities     5,730       5,917  
Total Liabilities     375,126       398,074  
         
Stockholders’ Deficit        
Common Stock     459       455  
Treasury Stock     (35,906 )     (25,090 )
APIC     1,026,115       1,031,633  
Accumulated Deficit     (1,116,373 )     (1,126,959 )
Accumulated Other Comprehensive Loss     (4,314 )     (4,113 )
Total Stockholders’ Deficit     (130,019 )     (124,074 )
         
Total Liabilities and Stockholders’ Deficit   $ 245,107     $ 274,000  
         
         
         
   
AVID TECHNOLOGY, INC. 
Supplemental Revenue Information   
(unaudited – in millions)         
                   
                   
  March 31,   Dec 31,   March 31,        
  2022   2021   2021          
Revenue Backlog*                  
                   
Deferred Revenue $ 92.3   $ 98.1   $ 97.5        
Other Backlog 283.0   314.7   319.3        
Total Revenue Backlog $ 375.3   $ 412.8   $ 416.8        
                   
                   
The expected timing of recognition of revenue backlog as of March 31, 2022 is as follows:
                   
  2022   2023   2024   Thereafter   Total
                   
Deferred Revenue $ 74.0   $ 11.9   $ 4.0   $ 2.4   $ 92.3
Other Backlog 99.2   75.8   54.5   53.5   $ 283.0
Total Revenue Backlog $ 173.2   $ 87.7   $ 58.5   $ 55.9   $ 375.3
                   
*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.
Condensed Consolidated Statements of Cash Flows
(unaudited – in thousands)
       
  Three Months Ended March 31,
    2022       2021  
       
Cash flows from operating activities:      
Net income $ 10,586     $ 4,391  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:      
Depreciation and amortization   1,803       2,119  
(Recovery) Provision for doubtful accounts   (135 )     83  
Stock-based compensation expense   3,422       3,122  
Non-cash provision for restructuring   15       912  
Non-cash interest expense   126       129  
Loss on extinguishment of debt         2,579  
Loss on Disposal of Fixed Assets   548        
Unrealized foreign currency transaction (gains) loss   (128 )     (1,432 )
Benefit from deferred taxes   1,055       501  
Changes in operating assets and liabilities:      
Accounts receivable   19,770       19,702  
Inventories   2,105       (1,048 )
Prepaid expenses and other assets   (2,067 )     (866 )
Accounts payable   (5,473 )     (2,604 )
Accrued expenses, compensation and benefits and other liabilities   (9,993 )     (9,887 )
Income taxes payable   (723 )     (259 )
Deferred revenue and contract assets   (12,995 )     (5,129 )
Net cash provided by operating activities   7,916       12,313  
       
Cash flows from investing activities:      
Purchases of property and equipment   (3,244 )     (1,254 )
Net cash used in investing activities   (3,244 )     (1,254 )
       
Cash flows from financing activities:      
Proceeds from long-term debt         180,000  
Repayment of debt         (201,208 )
Repayment of debt principal   (53 )     (2,346 )
Payments for repurchase of common stock   (10,562 )      
Common stock repurchases for tax withholdings for net settlement of equity awards   (8,936 )     (7,706 )
Payment for loss on extinguishment of debt         (1,169 )
Payments for credit facility issuance costs   (440 )     (2,574 )
Net cash used in financing activities   (19,991 )     (35,003 )
       
Effect of exchange rate changes on cash, cash equivalents, and restricted cash   (254 )     (332 )
Net decrease in cash, cash equivalents, and restricted cash   (15,573 )     (24,276 )
Cash, cash equivalents and restricted cash at beginning of the period   60,556       83,638  
Cash, cash equivalents and restricted cash at end of the period $ 44,983     $ 59,362  
Supplemental information:      
Cash and cash equivalents $ 41,245     $ 55,624  
Restricted cash   2,013       1,422  
Restricted cash included in other long-term assets   1,725       2,316  
Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 44,983     $ 59,362  
       

Alex

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