Advent Software (NASDAQ: ADVS), a leading provider of software and services to the investment management industry, announced today its financial results for the fourth quarter ended December 31, 2006.
"Advent had a phenomenal year in 2006, and we are very pleased to close it with such a strong fourth quarter," said Stephanie DiMarco, Advent's Chief Executive Officer. "We executed well on every front - financial performance, sales, client support and satisfaction, product development and delivery, and our transition to a term license model. The momentum we are building puts us in a position of unprecedented strength as we begin a new phase of growth for Advent."
The Company reported total net revenues of $50.2 million for the fourth quarter of 2006, compared with $45.9 million in the third quarter of 2006 and $45.6 million in the fourth quarter of 2005. Total revenues for the year ended December 31, 2006 were $184.1 million, compared with $168.7 million for the year ended December 31, 2005.
Total expenses, including cost of revenues, for the fourth quarter of 2006 were $52.4 million, compared with $45.5 million in the third quarter of 2006 and $43.4 million in the fourth quarter of 2005. The fourth quarter of 2006 results included a $3.4 million restructuring charge related to the Company's former headquarters facility. Total expenses, including cost of revenues, for the year ended December 31, 2006 were $184.4 million, compared with $162.4 million for the year ended December 31, 2005.
Net income for the fourth quarter of 2006 was $76.6 million, $78.0 million of which represents a release of the valuation allowance against the company's deferred tax assets. This result compares to net income of $952,000 for the third quarter of 2006 and $3.6 million for the fourth quarter of 2005. Net income for the year ended December 31, 2006 was $ 82.6 million, compared to net income of $14.1 million for 2005.
Diluted earnings per share in the fourth quarter of 2006 was $2.62, $2.66 of which represents a release of the valuation allowance against the company's deferred tax assets. This result compares to diluted earnings per share of $0.03 in the previous quarter and $0.11 in the fourth quarter of 2005. Diluted earnings per share for the year ended December 31, 2006 was $2.70, compared to $0.44 per diluted share for 2005.
Total expenses, net income and diluted earnings per share for the third and fourth quarters of 2006 and for the 2006 fiscal year include stock-based employee compensation expense of $3.4 million, $3.5 million and $13.6 million, respectively. Total expenses, net income and diluted earnings per share for the fourth quarter of 2005 and for the 2005 fiscal year do not include any stock-based employee compensation expense as the Company adopted FAS 123R effective January 1, 2006.
Cash, cash equivalents and short-term investments totaled $55.1 million as of December 31, 2006. This compares to $60.9 million at September 30, 2006 and $163.4 million as of December 31, 2005. Under the terms of the Board-authorized stock repurchase program announced on July 26, 2006, Advent repurchased 558,000 shares of the Company's common stock in the fourth quarter, for a total outlay of $20.7 million. Cash flow from operations in the fourth quarter of 2006 was approximately $15.2 million, compared with $10.4 million in the third quarter of 2006 and $12.3 million in the fourth quarter of 2005, an increase of 24% year over year.
"As a result of Advent's greatly improved financial performance over the past three years and our strong outlook for the future, we have released the deferred tax asset valuation allowance that was originally recorded in the fourth quarter of 2003," said Graham Smith, Advent's Chief Financial Officer. "This release caused the large tax provision benefit of $78.0 million in the current quarter. We will continue to use these assets to offset most of our tax payments for at least the next three years."
FOURTH QUARTER HIGHLIGHTS
- Record Term Contract Bookings: Advent signed new term contract bookings totaling $17.5 million with an average term of 3.2 years, which compares with $10.6 million in the previous quarter and $7.5 million in the fourth quarter of 2005. The current results represent the highest quarterly term bookings since the transition to the term license model began over two years ago. Advent's license revenue from term contracts as a percentage of total license revenue was 58%, compared with 28% a year earlier.
- Customer Momentum: Advent signed 103 new customer agreements and saw continued strong demand for both its newest and its largest portfolio management and accounting platforms: Advent Portfolio Exchange and Geneva, respectively. Advent Portfolio Exchange sold a record 26 licenses, while Geneva achieved a significant milestone, adding 10 new Geneva customers to bring the total number of Geneva customers to over 100.
- Geneva for Institutional Asset Managers: Advent signed a license agreement for Geneva with a major asset management firm managing over $200 billion in assets. The company selected Geneva in order to consolidate disparate systems into a single platform that can support multiple business lines and global offices, resulting in greater operational efficiencies and lower operating costs.
- Product Investment and Innovation: Advent released Moxy 5.2, which offers increased scalability and enables higher trade volume execution. The Company also delivered Advent Partner 6.0, which enables hedge funds and fund administrators to use a single solution for both onshore and offshore investor servicing and accounting.
- Acquisition of East Circle Solutions, Inc.: The Company announced today that it has acquired East Circle Solutions, a New York-based company that develops software to automate the billing process for investment management organizations. Advent plans to introduce a new version of the product, which will integrate seamlessly with both Advent Portfolio Exchange and Axys, in the first half of 2007.
Advent issued the following guidance for 2007:
- Revenues in the first quarter are projected to be in the range of $47 million to $49 million, with full year guidance of $206 million to $211 million;
- Expenses in the first quarter are projected to be in the range of $49 million to $50 million, with full year guidance of $204 million to $208 million; included in expenses are amortization of developed technology and intangibles and stock-based compensation, which are projected to be $1 million and $3.7 million, respectively, for the first quarter and $3.5 million and $15 million, respectively, for the full year;
- The expected effective tax rate for the full year 2007 is projected to be in the range of 40% to 45%;
- Diluted weighted average shares outstanding will increase by roughly 0.5% per quarter from the fourth quarter of 2006 level of 29.3 million shares, excluding the impact of any share repurchases;
- Term contract bookings for the full year 2007 is projected to be in the range of $54 million to $59 million; and
- Operating cash flow for the full year 2007 is projected to be in the range of $54 million to $57 million.