Avid Expertise Broadcasts Fourth Quarter and Fiscal 2020 Outcomes Nasdaq: AVID

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Avid Technology Announces Fourth Quarter and Fiscal 2020 Results Nasdaq: AVID

Sequential revenue growth of 15.3% in the fourth quarter as end markets continue to recover from the COVID-19 downturn

54.9% year-over-year subscription revenue growth in the fourth quarter, driven by a net increase of approximately 27,000 paid subscriptions and strong corporate subscription revenue for the quarter

Net cash from operating activities for the fourth quarter of $ 30.7 million, resulting in free cash flow of $ 30.6 million for the quarter

BURLINGTON, Mass., March 9, 2021 (GLOBE NEWSWIRE) – Avid® (NASDAQ: AVID), a leading technology provider to the media and entertainment industry, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2020 .

Total revenue increased 15.3% sequentially in the fourth quarter as many of Avid's end markets showed continued signs of recovery from the COVID-19 pandemic, while still being lower year over year. During the fourth quarter, the company's recurring revenue components remained strong with reported subscription revenue of $ 24.5 million, up 54.9% year over year. This reflects the strong corporate subscription revenue for the quarter. At the end of 2020, the company had a $ 231.3 million backlog in sales that is expected to be recognized in the next 12 months. This is an increase of 16.0% from the end of 2019. The fourth quarter continued to result in improved profitability and a strong seasonal contribution from working capital to free cash flow of $ 30.6 million for the quarter, the highest quarterly amount since 2007.

The non-recurring revenue shares of the company's business related to products and professional services continued to show strong signs of sequential recovery in the fourth quarter, although they are still below pre-COVID levels. Perpetual software license and integrated solutions product revenue increased 19.2% sequentially to $ 42.6 million in the fourth quarter, but declined 28.7% year over year.

For 2020 as a whole, Avid's revenues were negatively impacted by the COVID-19 pandemic. They fell by 12.5% ​​compared to 2019. However, subscription revenue grew 61.2% to $ 72.8 million, exceeding 20% ​​of total revenue from 11% in 2019. In 2020, the company saw its gross margin increase 280 basis points to 63.3%, which was mainly was due to a greater mix of software and subscription sales during the year. The benefit from the higher gross margin and a decrease in operating expenses from the cost savings achieved during the year resulted in improved profitability and cash generation. As of December 31, 2020, the company had cash and cash equivalents of $ 79.9 million.

Fourth quarter 2020 financial and business highlights

  • Subscription revenue was $ 24.5 million, an increase of 54.9% year over year.
  • Paid cloud-enabled software subscriptions grew 57.8% year over year to around 296,000 as of December 31, 2020 and around 27,000 in the fourth quarter.
  • Subscription and maintenance revenues were $ 55.5 million, up 12.7% year over year.
  • Total revenue was $ 104.3 million, an increase of 15.3% from the previous quarter and a decrease of (10.3%) year over year.
  • The gross margin was 62.7%, a decrease of 30 basis points from the previous year. The non-GAAP gross margin was 63.1%, a decrease of 10 basis points from the previous year.
  • Operating expenses were $ 54.5 million, down (5.3%) from the previous year. Non-GAAP operating expenses were $ 46.3 million, down (14.9%) from the previous year.
  • Operating income was $ 10.8 million, down (31.0%) from the prior year. Non-GAAP operating income was $ 19.4 million, an increase of 2.1% year over year.
  • Adjusted EBITDA was $ 21.6 million, an increase of 2.0 percent year over year. The adjusted EBITDA margin was 20.7%, an increase of 250 basis points over the previous year.
  • Net earnings per common share were $ 0.16, down from $ 0.35 for the fourth quarter of 2019. Net earnings per common share for the same period last year included a one-time benefit of $ 0.14 per share related to an allowance for certain deferred tax assets. Non-GAAP net earnings per share were $ 0.33, down from $ 0.28 for the fourth quarter of 2019.
  • Cash flow from operating activities for the quarter was $ 30.7 million. This represents an increase of $ 12.2 million over cash flow from operating activities of $ 18.5 million in the prior-year period.
  • Free cash flow was $ 30.6 million for the quarter, an increase of $ 13.7 million from free cash flow of $ 17.0 million for the same period last year.

Financial and business highlights of the 2020 financial year

  • Subscription revenue was $ 72.8 million, an increase of 61.2% year over year.
  • Subscription and maintenance revenues were $ 197.0 million, an increase of 12.2% over the prior year.
  • Total revenue was $ 360.5 million, down (12.5%) from the previous year.
  • LTM recurring revenue accounted for 74.2% of the company's revenue for the fiscal year ended December 31, 2020, an increase of 1,210 basis points from 62.1% the previous year.
  • The gross margin was 63.3%, an increase of 280 basis points over the previous year. The non-GAAP gross margin was 63.7%, an increase of 220 basis points over the previous year.
  • Operating expenses were $ 196.8 million, down (9.3%) from the previous year. Non-GAAP operating expenses were $ 179.5 million, down (13.1%) from the prior year.
  • Operating income was $ 31.6 million, down (1.7%) from the previous year. Non-GAAP operating income was $ 50.1 million, an increase of 7.1% year over year.
  • Adjusted EBITDA was $ 58.6 million, an increase of 4.7% year over year. The adjusted EBITDA margin was 16.3%, an increase of 270 basis points over the previous year.
  • Net income per common share was $ 0.25 compared to $ 0.17 in 2019. Non-GAAP net income per share was $ 0.65, up 27.3% from $ 0.51 in 2019.
  • Cash flow from operating activities was $ 39.6 million in 2020, an increase of $ 19.9 million over cash flow from operating activities of $ 19.6 million in 2019.
  • Free cash flow was $ 33.9 million in 2020, an increase of $ 21.4 million from free cash flow of $ 12.5 million in 2019.
  • The annual contract value was $ 300.6 million as of December 31, 2020, up 7.4% from $ 279.8 million as of December 31, 2019.

Jeff Rosica, Avid CEO and President said, “We are excited about the strength and growth of our recurring income business in the fourth quarter. The growth in our recurring income was largely driven by the continued expansion of our subscription revenue, which has now seen a second phase of growth as several enterprise customers introduced subscription plans during the quarter. In addition to the ongoing turnaround and sequential improvement we saw in the one-off elements of our business, we also saw strong booking and billing performance in the fourth quarter, which added to a stronger opening backlog for 2021 and made us better at the start of the fiscal year positioned New Years. "Mr. Rosica added," As our customers adapt their business models, we believe they will continue to invest in value-added technology and that we are well positioned to meet those needs for them. We also expect the The full year benefit of our optimized cost structure will enable Avid to become a stronger and more profitable company in 2021 and beyond. "

Ken Gayron, Avid Executive Vice President and Chief Financial Officer, said, “We are delighted that we continued to make significant progress in the fourth quarter in increasing our higher margin revenue streams and improving our cost structure to deliver our strongest quarterly free cash flow This improvement in free cash flow has further strengthened our balance sheet and positioned us for the successful refinancing of our bank debt, which we completed in January 2021. "Mr. Gayron continued," Our successful refinancing should reduce our annual interest costs by approximately $ 10 million. Along with the expected improvement in our business, we should be able to drive further improvements in free cash flow as we look forward to the rest of 2021 and beyond. "

Guidelines for the first quarter and all of 2021

For the first quarter of 2021, Avid announces guidance for revenue, subscription and maintenance revenue, adjusted EBITDA, and non-GAAP net earnings per share. For the full year 2021, Avid provides guidelines for subscription and maintenance revenues and free cash flow. Avid is currently planning to expand its forecasts for the full year 2021 during the course of the year to include additional key figures and to host an investor day in May 2021.

(in USD millions, excluding amounts per share) Q1 2021
revenue $ 88- $ 94
Subscription and Maintenance Revenue $ 50- $ 53
Adjusted EBITDA $ 12.2 – $ 15.8
Non-GAAP Net Earnings Per Share $ 0.17 – $ 0.24
All year round 2021
Subscription and Maintenance Revenue $ 214- $ 221
Free cash flow $ 45- $ 52

All guidance presented by the Company is inherently uncertain and is subject to numerous risks and uncertainties. Avid's actual future results of operations could differ materially from those shown in the table above. For an explanation of some of the key assumptions underlying the guidelines and the main risks and uncertainties associated with these forward-looking statements, see “Forward-Looking Statements” below and the Avid Technology Q4 and Full Year 2020 Business Update Presentation on the Investor Relations website from Avid at ir.avid.com.

Conference call to discuss fourth quarter and fiscal 2020 results on March 9, 2021

Avid will host a conference call at 5:00 p.m. on Tuesday, March 9, 2021 to discuss fourth quarter and fiscal 2020 financial results. ET. Attendees can attend the webcast in listen-only mode and access the presentation slides through the link on the Avid Investor Relations website located on the Events tab at ir.avid.com. Participants wishing to ask a question can access the call by dialing +1 856-344-9206 and referring to the verification code 1881087. Please connect at least 15 minutes in advance to ensure a timely connection to the call. A recording of the call will also be available on the Avid Investor Relations website for a limited time shortly after the call is completed.

Non-GAAP Financial Metrics and Operational Metrics

Avid contains 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 Operating Income, and Non-GAAP -compliant net result (loss). per share. The company also includes operating metrics for cloud-enabled software subscriptions, revenue backlog, recurring revenue, recurring LTM revenue in%, and annual contract value in this release. Avid believes that the non-GAAP financial and operational metrics contained in this press release provide investors with useful information in evaluating company performance. Unless otherwise stated, all financial and operational information is reported based on actual exchange rates. The definitions of the non-GAAP financial metrics and operational metrics are included in our Form 8-K, filed today. The reconciliation of the non-GAAP financial measures presented in this press release to the Company's comparable GAAP financial measures for the periods presented is set out below and is also included in the supplementary financial and operational data sheet available on our Investor Relations website at ir.avid .com, which also includes definitions of all operational metrics.

Forward-Looking Statements

Certain information in this press release contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, which have been made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements related to our future financial performance or position, results of operations, business strategy, plans and goals of management for future operations, and other statements that are not historical facts. You can identify forward-looking statements by using forward-looking words such as "may", "will", "anticipate", "expect", "believe", "estimate", "intend", "plan", "plan" should "," search ”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 about 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 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 coronavirus (COVID-19) outbreak on our business, suppliers, consumers, customers and employees; our liquidity; our ability to implement 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 to respond to changing market demand, particularly in the media industry; our ability to successfully implement our product development plans; Competitive factors; History of losses; Fluctuations in sales due, among other things, to our performance and our risks in certain regions or markets; our greater indebtedness and ability to service it and meet its obligations; Restrictions in our credit facilities; our move to a subscription model and the associated impact on our earnings and our ability to predict future earnings; Fluctuations in subscription and maintenance renewal rates; extended sales cycles; Exchange rate fluctuations; seasonal factors; adverse changes in economic conditions; Deviations in our sales backlog and their realization; Risks related to the availability and prices of raw materials, including adverse effects from inflation, weather conditions or health pandemics; Disruptions or inefficiencies in our supply chain and / or operations, including the COVID-19 outbreak; the costs, disruptions, and distractions of management's attention due to the COVID-19 outbreak; the possibility of legal proceedings that conflict with our company; and other risks described in our reports filed from time to time with the United States Securities and Exchange Commission. In addition, business may be adversely affected by future legal, regulatory or other changes, including changes in tax law, as well as other economic, business and / or competitive factors. The risks mentioned above do not claim to be exhaustive. We caution readers not to place undue reliance on forward-looking statements in this press release, which speak only as of the date of this press release. We are not responsible for updating or revising forward-looking statements unless required by law.

About Avid

Avid offers the most open and efficient media platform that combines content creation with collaboration, protection, distribution and consumption of resources. Avid's outstanding customer community leverages Avid's comprehensive tools and workflow solutions to create, distribute, and monetize the world's most watched, loved, and listened to media – from prestigious and award-winning movies to popular television shows, news shows, and sporting events in the Watch TV. and acclaimed music recordings and live concerts. Avid's industry-leading solutions with the most flexible deployment and pricing options include Media Composer®, Pro Tools®, Avid NEXIS®, MediaCentral®, iNEWS®, AirSpeed®, Sibelius®, Avid VENUE ™, FastServe® ™ and Maestro ™. For more information about Avid solutions and services, visit www.avid.com, connect with Avid on Facebook, Instagram, Twitter, YouTube, LinkedIn, or subscribe to Avid blogs.

© 2021 Avid Technology, Inc. All rights reserved. Avid, the Avid logo, Avid NEXIS, FastServe, AirSpeed, iNews, Maestro, MediaCentral, Media Composer, Pro Tools, Avid VENUE, and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and / or other countries. All other trademarks are property of their respective owners. Product features, specifications, system requirements and availability are subject to change without notice.

AVID TECHNOLOGY, INC.
Condensed consolidated income statement
(unaudited – in thousands, except data per share)
Three months ended Twelve months ended
December 31, December 31,
2020 2019 2020 2019
Net sales:
Products $ 42,642 $ 59,812 $ 140,762 $ 207.445
Services 61,659 56,494 219,704 204,343
Total net sales 104,301 116,306 360.466 411,788
Cost of sales:
Products 25,349 30.264 84.222 109,799
Services 13,602 12,769 47,924 49.176
Amortization of intangible assets – – – – – – 3.738
Total cost of revenue 38,951 43,033 132.146 162.713
Gross income 65,350 73.273 228.320 249.075
Operating expenses:
Research and Development 14,902 16,018 57.018 62,343
Marketing and Sales 22,660 26,603 87,637 99,944
General and administrative 12,908 14,816 47.052 53,362
Amortization of intangible assets – – – – – – 694
Restructuring costs, net 4.038 113 5.046 629
Business expense 54.508 57,550 196.753 216.972
Operating profit 10,842 15,723 31,567 32.103
Interest and other expenses, net (3,929 ) (5.584 ) (19, 133 ) (29.578 )
Earnings before taxes 6,913 10.139 12,434 2.525
Provision for (benefit of) income taxes (174 ) (5.231 ) 1,372 (5.076 )
Net income $ 7,087 $ 15,370 $ 11,062 $ 7.601
Net income per ordinary share – undiluted $ 0.16 $ 0.36 $ 0.25 $ 0.18
Earnings per common share – diluted $ 0.16 $ 0.35 $ 0.25 $ 0.17
Weighted Average Ordinary Shares Outstanding – Basis 44.288 43,060 43,822 42,649
Weighted average common shares outstanding – diluted 45,541 43,737 44,878 43,495
AVID TECHNOLOGY, INC.
Reconciliation of GAAP financial measures to non-GAAP financial measures
(unchecked – by the thousands)
Three months ended Twelve months ended
December 31, December 31,
GAAP sales 2020 2019 2020 2019
GAAP sales $ 104,301 $ 116,306 $ 360.466 $ 411,788
Non-GAAP Gross Income
GAAP gross profit 65,350 73.273 228.320 249.075
Amortization of intangible assets – – – – – – 3.738
Share-based payment 431 197 1.339 617
Non-GAAP Gross Income $ 65,781 $ 73,470 $ 229.659 $ 253.430
Non-GAAP gross margin 63.1 %. 63.2 %. 63.7 %. 61.5 %.
Non-GAAP operating expenses
GAAP operating expenses 54.508 57,550 196.753 216.972
Less amortization of intangible assets (105 ) – – (411 ) (695 )
Less stock-based pay (2.101 ) (1,973 ) (9.325 ) (7.341 )
Less restructuring costs, net (4.038 ) (113 ) (5.046 ) (631 )
Less restatement costs – – 15th – – 18th
Lower acquisition, integration and other costs (1.015 ) (988 ) (832 ) (1.446 )
Less costs for the efficiency program (886 ) (59 ) (1.331 ) (250 )
Less COVID-19 costs (27 ) – – (278 ) – –
Non-GAAP operating expenses $ 46,336 $ 54,432 $ 179,530 $ 206.627
Non-GAAP Operating Income
GAAP operating income 10,842 15,723 31,567 32.103
Amortization of intangible assets 105 – – 411 4,433
Share-based payment 2.532 2,170 10,664 7,958
Restructuring costs, net 4.038 113 5.046 631
Restatement costs – – (15 ) – – (18 )
Acquisition, integration and other costs 1,015 988 832 1,446
Efficiency program costs 886 59 1.331 250
COVID-19 related expenses 27 – – 278 – –
Non-GAAP Operating Income $ 19,445 $ 19,038 $ 50.129 $ 46,803
Adjusted EBITDA
Non-GAAP Operating Income (from top) 19,445 19,038 50.129 46,803
depreciation 2.188 2.166 8.505 9.202
Adjusted EBITDA $ 21,633 $ 21.204 $ 58,634 $ 56.005
Adjusted EBITDA margin 20.7 %. 18.2 %. 16.3 %. 13.6 %.
Non-GAAP Net Income
Non-GAAP Operating Income (from top) 19,445 19,038 50.129 46,803
Less non-GAAP interest and other expenses (3,929 ) (5.584 ) (19, 133 ) (22.207 )
Less non-GAAP income tax (287 ) (1,299 ) (1,868 ) (2,417 )
Non-GAAP Net Income $ 15.229 $ 12,155 $ 29.128 $ 22,179
Weighted Average Ordinary Shares Outstanding – Basis 44.288 43,060 43,822 42,649
Weighted average common shares outstanding – diluted 45,541 43,737 44,878 43,495
Non-GAAP Earnings Per Share – Fundamental $ 0.34 $ 0.28 $ 0.66 $ 0.52
Non-GAAP Earnings Per Share – Diluted $ 0.33 $ 0.28 $ 0.65 $ 0.51
Free cash flow
GAAP net cash flow (used in) from operating activities 30,704 18,529 39,555 19,641
Investments (73 ) (1.556 ) (5,692 ) (7.185 )
Free cash flow $ 30,631 $ 16,973 $ 33,863 $ 12,456
Free cash flow conversion of the adjusted EBITDA 141.6 %. 80.0 %. 57.8 %. 22.2 %.
These non-GAAP measures reflect how Avid manages its business internally. Avid's non-GAAP measures may differ from how other companies present non-GAAP measures. Non-GAAP financial measures are not based on comprehensive 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.
Condensed Consolidated Balance Sheets
(unaudited – in thousands)
December 31, December 31,
2020 2019
ASSETS
Current assets:
Cash and cash equivalents $ 79.899 $ 69.085
Limited money 1.422 1.663
Accounts receivable, net of allowances of $ 1,478 and $ 958 at December 31, 2020 and December 31, 2019, respectively 78.614 73.773
Stocks 26,568 29,166
Prepaid expenses 6.044 9.425
Contract assets 18,579 19.494
Other current assets 2,366 6.125
Total current assets 213,492 208.731
Property and equipment, net 16.814 19,580
Goodwill 32.643 32.643
Right of use assets 29,430 29.747
Deferred tax assets, net 6.801 7.479
Other long-term assets 5,958 6.113
Total assets $ 305.138 $ 304.293
LIABILITIES AND STOCKHOLDERS & # 39; DEFICIT
Short-term liabilities:
Settlement liabilities $ 21,823 $ 39.888
Accrued compensation and benefits 29.105 19,524
Accrued expenses and other current liabilities 42.264 36.759
Income taxes payable 1.664 1.945
Short-term debt 4,941 30.554
Deferred revenues 87.974 83,589
Total short-term liabilities 187.771 212.259
Long-term debt 202.759 199.034
Long-term deferred revenues 11.284 14.312
Long-term lease liabilities 28,462 28.127
Other long-term liabilities 7.786 5.646
Total liabilities 438,062 459.378
Stockholders & # 39; deficit:
Common stock 442 430
Additional paid-in capital 1,036,658 1,027,824
Accumulated deficit (1,168,347 ) (1,179,409 )
Accumulated other comprehensive loss (1.677 ) (3,930 )
Total stockholders & # 39; deficit (132,924 ) (155.085 )
Total liabilities and stockholders & # 39; deficit $ 305.138 $ 304.293
AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited – in thousands)
Twelve Months Ended
December 31,
2020 2019
Cash flows from operating activities:
Net income $ 11,062 $ 7.601
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 8.505 13.634
Provision for doubtful accounts 1.298 208
Stock-based compensation expense 10.664 7,958
Non-cash provision for restructuring 5.046 – –
Non-cash interest expense 3,651 6.143
Loss on extinguishment of debt – – 2,878
Unrealized foreign currency transaction loss 1,570 971
Benefit from (provision for) deferred taxes 827 (6.309 )
Changes in operating assets and liabilities:
Accounts receivable (6.124 ) (6.227 )
Stocks 2,598 3.790
Prepaid expenses and other assets 6.176 (44 )
Abbrechnungsverbindlichkeiten (18,141 ) 626
Accrued expenses, compensation and benefits and other liabilities 10,432 (6,892 )
Income taxes payable (281 ) 91
Deferred revenue and contract assets 2,272 (4,787 )
Net cash provided by operating activities 39,555 19,641
Cash flows from investing activities:
Purchases of property and equipment (5,692 ) (7,185 )
Net cash used in investing activities (5,692 ) (7,185 )
Cash flows from financing activities:
Proceeds from revolving line of credit 22,000 – –
Repayment on revolving line of credit (22,000 ) – –
Proceeds from long-term debt 7,800 79,292
Repayment of debt (2,250 ) (1,438 )
Payments for repurchase of outstanding Notes (28,867 ) (76,269 )
Proceeds from the issuance of common stock under employee stock plans 547 309
Common stock repurchases for tax withholdings for net settlement of equity awards (2,365 ) (3,586 )
Partial Unwind capped call cash receipt 875 27
Payments for credit facility issuance costs (289 ) (5,979 )
Net cash used in financing activities (24,549 ) (7,644 )
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 1,748 (331 )
Net decrease in cash, cash equivalents, and restricted cash 11,062 4,481
Cash, cash equivalents and restricted cash at beginning of the period 72,575 68,094
Cash, cash equivalents and restricted cash at end of the period $ 83,637 $ 72,575
Supplemental information:
Zahlungsmittel und Zahlungsmitteläquivalente $ 79,899 $ 69,085
Beschränktes Geld 1,422 1,663
Restricted cash included in other long-term assets 2,316 1,827
Total cash, cash equivalents and restricted cash shown in the statement of cash flows $ 83,637 $ 72,575
AVID TECHNOLOGY, INC.
Supplemental Revenue Information
(unaudited – in millions)
December 31 30. September December 31
2020 2020 2019
Revenue Backlog*
Deferred Revenue $ 99.3 $ 81.2 $ 97.9
Other Backlog 336.2 321.7 342.3
Total Revenue Backlog $ 435.5 $ 402.9 $ 440.2
The expected timing of recognition of revenue backlog as of December 31, 2020 is as follows:
2021 2022 2023 Thereafter total
Deferred Revenue $ 88.0 $ 6.9 $ 2.5 $ 1.9 $ 99.3
Other Backlog 143.3 99.9 65.5 27.5 $ 336.2
Total Revenue Backlog $ 231.3 $ 106.8 $ 68.0 $ 29.4 $ 435.5
*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.