AMSTERDAM, Oct. 31, 2012 /PRNewswire/ -- AVG
Technologies N.V. (NYSE: AVG) today reported results for the third
quarter ended September 30, 2012.
"AVG's financial results well exceeded our expectations for the
third quarter, driven by strong growth in both our subscription and
platform derived businesses," stated J.R.
Smith, chief executive officer of AVG. "During the quarter,
we enhanced our portfolio of products and services with the launch
of AVG 2013. Our latest line of products and services focuses on
protection, performance and privacy as well as the introduction of
free phone support for even our free customers. Also in the
quarter, we continued to increase our active user count to 143
million, including 20 million mobile users. Considering our strong
execution, we are again raising our outlook for the fiscal year
2012."
Revenue for the third quarter of 2012 was $95.3 million, compared with $71.2 million for the third quarter of 2011, an
increase of 34 percent.
Net income for the third quarter of 2012 was $19.0 million, or $0.35 per diluted ordinary share, based on 54.7
million weighted-average diluted shares outstanding. This
compares to net income of $6.7
million, or $0.09 per diluted
share, and 39.1 million weighted-average diluted shares outstanding
for the third quarter of 2011.
Non-GAAP adjusted net income for the third quarter of 2012 was
$23.4 million, or $0.43 per diluted share. This compares to
non-GAAP adjusted net income of $10.5
million, or $0.20 per diluted
share, for the same period of the prior year[1]. Non-GAAP results
for the third quarter of 2012 exclude $2.7
million in share-based compensation expense and $1.9 million in acquisition amortization and
reflect a $0.2 million adjustment to
normalize to a tax rate of 14 percent.
Deferred revenue as of September 30,
2012 was $162.2 million. Cash
and cash equivalents totaled $86.7
million as of September 30,
2012. Net debt[2] was $66.2
million as of September 30,
2012, compared to $73.7
million at June 30, 2012.
AVG generated $25.3 million in
cash from operating activities in the third quarter of 2012, and
$27.2 million in non-GAAP unlevered
free cash flow. This represents a 29 percent revenue to non-GAAP
unlevered free cash flow conversion rate.
Financial Outlook
Based on information available as of October 31, 2012, AVG is providing the following
financial outlook for the fourth quarter of 2012:
- Revenue is expected to be in the range of $94.0 million to $98.0 million.
- Net income is expected to be in the range of $9.0 million to $10.0 million; diluted EPS is
expected to be in the range of $0.16 to
$0.18.
- Non-GAAP adjusted net income is expected to be in the range of
$14.0 million to $15.0 million;
non-GAAP diluted EPS is expected to be in the range of $0.25 to $0.27.
AVG's expectation of non-GAAP adjusted net income for the fourth
quarter of 2012 excludes share-based compensation expense and
acquisition amortization and assumes a tax rate of 14 percent. For
the purpose of calculating diluted EPS and non-GAAP diluted EPS in
the fourth quarter, the company assumes approximately 55.5 million
weighted-average shares outstanding.
Based on information available as of October 31, 2012, AVG is increasing its financial
outlook for fiscal year 2012 as follows:
- Revenue is expected to be in the range of $354.0 million to $358.0 million.
- Net income is expected to be in the range of $50.0 million to $51.0 million; diluted EPS is
expected to be in the range of $0.91 to
$0.93.
- Non-GAAP adjusted net income is expected to be in the range of
$73.0 million to $74.0 million;
non-GAAP diluted EPS is expected to be in the range of $1.34 to $1.36.
- Operating cash flow is expected to be in the range of
$110.0 million to $114.0 million;
non-GAAP unlevered free cash flow is expected to be in the range of
$111.0 million to $115.0
million.
AVG's expectation of non-GAAP adjusted net income for the fiscal
year 2012 excludes share-based compensation expense and acquisition
amortization and assumes a tax rate of 14 percent. For the purpose
of calculating diluted EPS and non-GAAP diluted EPS for 2012, the
company assumes approximately 54.5 million weighted-average shares
outstanding.
Conference Call Information
AVG will hold its quarterly conference call today at
22:00 CET/5:00
p.m. ET/2:00 p.m. PT to
discuss its third quarter financial results, business highlights
and outlook. The conference call may be accessed via webcast at
http://investors.avg.com or by calling +1 (877) 941-1427
(United States and Canada) or +1 (480) 629-9664
(International).
A replay of the webcast can be accessed via
http://investors.avg.com. Additionally, an audio replay of the
conference call will be available through November 7, 2012 by calling +1 (800) 406-7325
(United States and Canada) or +1 (303) 590-3030 (International),
(conference passcode required: 4568939#).
Use of Non-GAAP Financial Information
This press release contains supplemental non-GAAP financial
measures including the following: non-GAAP adjusted net income,
non-GAAP adjusted net income per diluted share and non-GAAP
unlevered free cash flow. The presentation of this supplemental
non-GAAP financial information, which is not prepared under any
comprehensive set of accounting rules or principles, is not
intended to be considered in isolation or as a substitute for, or
superior to, the financial information prepared and presented in
accordance with generally accepted accounting principles in
the United States. In particular,
adjusted net income, adjusted net income per diluted share and
unlevered free cash flow should not be considered as measurements
of the company's financial performance or liquidity under U.S.
GAAP, as alternatives to income, operating income, cash flow from
operation or any other performance measures derived in accordance
with U.S. GAAP or as alternatives to cash flow from operating
activities as a measure of the company's liquidity. Adjusted
net income, adjusted net income per diluted share and unlevered
free cash flow have limitations as analytical tools and should not
be considered in isolation from, or as substitutes for, analysis of
AVG's results of operations, including its cash flows, as reported
under U.S. GAAP. Some of the limitations of adjusted net
income, adjusted net income per diluted share and unlevered free
cash flow as financial measures are:
- they do not reflect the company's future requirements for
capital expenditure or contractual commitments, nor, in the case of
the income measures, do they reflect the actual cash contributions
received from customers;
- except in the case of free cash flow, they do not reflect
changes in, or cash requirements for, the company's working capital
needs;
- they do not reflect the interest expense, or the cash
requirements necessary to service interest or principal payments,
on the company's debt;
- although amortization and share-based compensation are non-cash
charges, the assets being amortized will often have to be replaced
in the future and such measures do not reflect any cash
requirements for such replacements; and
- other companies in AVG's industry may calculate these measures
differently than AVG does, limiting their usefulness as comparative
measures.
Because of these limitations, investors should rely on AVG's
consolidated financial statements prepared in accordance with U.S.
GAAP and treat the company's non-GAAP financial measures as
supplemental information only.
AVG is providing these non-GAAP financial measures because it
believes that such measures provide important supplemental
information to management and investors about the company's core
operating results, primarily because the non-GAAP financial
measures exclude certain expenses and other amounts that management
does not consider to be indicative of the company's core operating
results or business outlook. AVG management uses these non-GAAP
financial measures, in addition to the corresponding U.S. GAAP
financial measures, in evaluating the company's operating
performance, in planning and forecasting future periods, in making
decisions regarding business operations and allocation of
resources, and in comparing the company's performance against its
historical performance.
For a reconciliation of these non-GAAP financial measures to the
most directly comparable financial measures prepared in accordance
with U.S. GAAP, please see "Reconciliation of U.S. GAAP to non-GAAP
Financial Measures." All non-GAAP financial measures should
be read in conjunction with the comparable information presented in
accordance with U.S. GAAP.
Forward-Looking Statements
This press release contains forward-looking statements within
the Private Securities Litigation Reform Act of 1995, including
those relating to an expected range of revenue, net income, EPS,
operating cash flow, non-GAAP adjusted net income, non-GAAP
EPS and non-GAAP unlevered free cash flow for the three-month
period ending December 31, 2012
and/or the fiscal year ending December
31, 2012. Words such as "expects," "expectation,"
"intends," "assumes," "believes" and "estimates," variations of
such words and similar expressions are also intended to identify
forward-looking statements. These forward-looking statements
involve risks and uncertainties that could cause actual results to
differ materially from those contemplated herein. Factors that
could cause or contribute to such differences include but are not
limited to: changes in the company's growth strategies; changes in
the company's future prospects, business development, results of
operations and financial condition; changes to the online and
computer threat environment and the endpoint security industry;
competition from local and international companies, new entrants in
the market and changes to the competitive landscape; the adoption
of new, or changes to existing, laws and regulations; flaws in the
assumptions underlying the calculation of the number of the
company's active users; the termination of or changes to the
company's relationships with its partners and other third parties;
changes in the company's and its partners' responses to privacy
concerns; the company's plans to launch new products and online
services and monetize its full user base; the company's ability to
attract and retain active and subscription users; the company's
ability to retain key personnel and attract new talent; the
company's ability to adequately protect its intellectual
property; flaws in the company's internal controls or IT
systems; the company's geographic expansion plans; the anticipated
costs and benefits of the company's acquisitions; the outcome of
ongoing or any future litigation or arbitration, including
litigation or arbitration relating to intellectual property rights;
the company's legal and regulatory compliance efforts; and
worldwide economic conditions and their impact on demand for the
company's products and services. Given these risks and
uncertainties, you should not place undue reliance on these
forward-looking statements.
Further information on these factors and other risks that may
affect the company's business is included in filings AVG makes with
the Securities and Exchange Commission (SEC) from time to time,
including its Annual Report on Form 20-F, particularly under the
heading "Risk Factors".
The financial information contained in this press release should
be read in conjunction with the consolidated financial statements
and notes thereto to be included in the company's report on Form
6-K. The company's results of operations for the third
quarter ended September 30, 2012 are
not necessarily indicative of the company's operating results for
any future periods.
These documents are available online from the SEC or in the
Investor Relations section of our website at
http://investors.avg.com. Information on our website is not part of
this release. All forward-looking statements in this press release
are based on information currently available to us, and we assume
no obligation to update these forward-looking statements in light
of new information or future events.
(Logo:
http://photos.prnewswire.com/prnh/20120306/SF65434LOGO)
About AVG
AVG's mission is to simplify, optimize and secure the Internet
experience, providing peace of mind to a connected world. AVG's
powerful yet easy-to-use software and online services put users in
control of their Internet experience. By choosing AVG's software
and services, users become part of a trusted global community that
benefits from inherent network effects, mutual protection and
support. AVG has grown its user base to 143 million active users as
of September 30, 2012 and offers a
product portfolio that targets the consumer and small business
markets and includes Internet security, PC performance
optimization, online backup, mobile security, identity protection
and family safety software.
[1] Non-GAAP adjusted net income per non-GAAP diluted share is
calculated based on adjusted net income including earnings
attributable to preferred shares in 2011. For further
details, see the reconciliation note at the end of this press
release.
[2] Net debt represents current and non-current debt less cash
and cash equivalents.
AVG
Technologies N.V.
|
Condensed Consolidated Balance
Sheets
|
(In
Thousands)
|
|
|
|
|
|
December 31, 2011
|
|
September 30, 2012
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and
cash equivalents
|
$
|
60,740
|
$
|
86,703
|
Trade
accounts receivable, net
|
|
25,363
|
|
34,993
|
Inventories
|
|
883
|
|
932
|
Deferred
income taxes
|
|
18,394
|
|
18,394
|
Prepaid
expenses
|
|
3,975
|
|
4,841
|
Prepaid
share issuance cost
|
|
6,820
|
|
0
|
Other
current assets
|
|
6,363
|
|
7,153
|
Total
current assets
|
|
122,538
|
|
153,016
|
Property
and equipment, net
|
|
12,436
|
|
12,303
|
Deferred
income taxes
|
|
59,750
|
|
56,770
|
Intangible
assets, net
|
|
35,035
|
|
36,850
|
Goodwill
|
|
71,367
|
|
72,277
|
Investment
in equity affiliate
|
|
511
|
|
333
|
Investments
|
|
9,750
|
|
9,750
|
Other
assets
|
|
248
|
|
2,510
|
Total
assets
|
$
|
311,635
|
$
|
343,809
|
|
|
|
|
|
LIABILITIES, PREFERRED SHARES AND SHAREHOLDERS'
DEFICIT
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
|
11,035
|
$
|
9,983
|
Accrued
compensation and benefits
|
|
15,941
|
|
18,876
|
Accrued
expenses and other current liabilities
|
|
30,878
|
|
27,298
|
Current
portion of long term debt
|
|
41,125
|
|
18,700
|
Income
taxes payable
|
|
4,161
|
|
3,361
|
Deferred
revenue
|
|
120,269
|
|
131,361
|
Total
current liabilities
|
|
223,409
|
|
209,579
|
Long-term
debt, less current portion
|
|
184,315
|
|
134,202
|
Deferred
revenue, less current portion
|
|
30,839
|
|
30,844
|
Other
non-current liabilities
|
|
3,397
|
|
3,646
|
Total
liabilities
|
|
441,960
|
|
378,271
|
Class D
preferred shares
|
|
191,954
|
|
0
|
Ordinary
shares
|
|
476
|
|
722
|
Additional
paid-in capital (Distributions in excess of capital)
|
|
(388,225)
|
|
(136,341)
|
Treasury
shares
|
|
0
|
|
(3,869)
|
Accumulated other comprehensive loss
|
|
(6,324)
|
|
(5,129)
|
Retained
earnings
|
|
71,794
|
|
110,155
|
Total
shareholders' deficit
|
|
(322,279)
|
|
(34,462)
|
Total
liabilities, preferred shares and shareholders'
deficit
|
$
|
311,635
|
$
|
343,809
|
|
|
|
|
|
AVG
Technologies N.V.
|
Condensed Consolidated Statements of Comprehensive
Income
|
(In
thousands, except share data and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended
|
|
Nine
months ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Subscription
|
$
|
43,942
|
$
|
49,226
|
$
|
130,071
|
$
|
143,210
|
Platform-derived
|
|
27,228
|
|
46,027
|
|
68,022
|
|
117,551
|
Total
revenue
|
|
71,170
|
|
95,253
|
|
198,093
|
|
260,761
|
Cost of
revenue:
|
|
|
|
|
|
|
|
|
Subscription
|
|
5,832
|
|
5,794
|
|
17,287
|
|
19,597
|
Platform-derived
|
|
3,352
|
|
9,548
|
|
6,517
|
|
20,214
|
Total
cost of revenue
|
|
9,184
|
|
15,342
|
|
23,804
|
|
39,811
|
Gross
profit
|
|
61,986
|
|
79,911
|
|
174,289
|
|
220,950
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
19,190
|
|
22,298
|
|
53,904
|
|
63,710
|
Research
and development
|
|
8,835
|
|
11,833
|
|
24,478
|
|
38,981
|
General
and administrative
|
|
18,332
|
|
16,784
|
|
35,984
|
|
48,588
|
Total
operating expenses
|
|
46,357
|
|
50,915
|
|
114,366
|
|
151,279
|
Operating income
|
|
15,629
|
|
28,996
|
|
59,923
|
|
69,671
|
Other
expense, net
|
|
(5,535)
|
|
(6,383)
|
|
(12,278)
|
|
(17,732)
|
Income
before income taxes and loss from investment in equity
affiliate
|
|
10,094
|
|
22,613
|
|
47,645
|
|
51,939
|
Benefit
(Provision) for income taxes
|
|
(3,373)
|
|
(3,581)
|
|
52,212
|
|
(10,845)
|
Loss from
investment in equity affiliate
|
|
(61)
|
|
(69)
|
|
(180)
|
|
(178)
|
Net
income
|
|
6,660
|
|
18,963
|
|
99,677
|
|
40,916
|
Comprehensive income
|
$
|
4,418
|
$
|
19,686
|
$
|
96,767
|
$
|
42,111
|
Net
income
|
$
|
6,660
|
$
|
18,963
|
$
|
99,677
|
$
|
40,916
|
Preferred
share dividends
|
|
(1,802)
|
|
0
|
|
(5,406)
|
|
(753)
|
Distributed and undistributed earnings to
participating securities
|
|
(1,214)
|
|
0
|
|
(27,513)
|
|
0
|
Net
income available to ordinary shareholders
|
$
|
3,644
|
$
|
18,963
|
$
|
66,758
|
$
|
40,163
|
Net income
available to ordinary shareholders - basic
|
$
|
3,644
|
$
|
18,963
|
$
|
66,758
|
$
|
40,163
|
Net income
available to ordinary shareholders - diluted
|
$
|
3,644
|
$
|
18,963
|
$
|
66,758
|
$
|
40,916
|
Earnings
per ordinary share - basic
|
$
|
0.10
|
$
|
0.35
|
$
|
1.85
|
$
|
0.77
|
Earnings
per ordinary share - diluted
|
$
|
0.09
|
$
|
0.35
|
$
|
1.72
|
$
|
0.75
|
Weighted-average shares outstanding -
basic
|
|
36,000,000
|
|
54,232,743
|
|
36,000,000
|
|
51,850,912
|
Weighted-average shares outstanding -
diluted
|
|
39,137,695
|
|
54,710,323
|
|
38,837,773
|
|
54,231,072
|
|
|
|
|
|
|
|
|
|
AVG
Technologies N.V.
|
Condensed Consolidated Statements of Cash
Flows
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended
|
|
Nine
months ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
6,660
|
$
|
18,963
|
$
|
99,677
|
$
|
40,916
|
Adjustments to reconcile net income to net cash
provided by
|
|
|
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
2,922
|
|
4,279
|
|
7,943
|
|
12,652
|
Share-based compensation
|
|
1,189
|
|
2,727
|
|
3,012
|
|
10,753
|
Deferred
income taxes
|
|
4,545
|
|
2,122
|
|
(51,997)
|
|
3,487
|
Change in
the fair value of contingent consideration liabilities
|
|
(576)
|
|
(600)
|
|
(401)
|
|
(332)
|
Amortization of financing costs and loan
discount
|
|
659
|
|
2,179
|
|
1,402
|
|
3,512
|
Dividend
income
|
|
0
|
|
339
|
|
0
|
|
0
|
Loss from
investment in equity affiliate
|
|
61
|
|
69
|
|
180
|
|
178
|
Loss
(gain) on sale of property and equipment
|
|
61
|
|
(9)
|
|
232
|
|
(50)
|
Net
change in assets and liabilities, excluding effects
of
|
|
|
|
|
|
|
|
|
acquisitions:
|
|
|
|
|
|
|
|
|
Trade
accounts receivable, net
|
|
1,893
|
|
(5,345)
|
|
5,496
|
|
(8,629)
|
Inventories
|
|
(136)
|
|
(271)
|
|
(125)
|
|
(42)
|
Accounts
payable and accrued liabilities
|
|
2,030
|
|
1,577
|
|
1,377
|
|
8,089
|
Accrued
compensation and benefits
|
|
919
|
|
(1,983)
|
|
299
|
|
488
|
Deferred
revenue
|
|
(5,379)
|
|
3,272
|
|
3,037
|
|
9,540
|
Income
taxes payable
|
|
77
|
|
(1,850)
|
|
949
|
|
(803)
|
Other
assets
|
|
(5,926)
|
|
(257)
|
|
(7,907)
|
|
(1,468)
|
Other
liabilities
|
|
770
|
|
54
|
|
(458)
|
|
(184)
|
Net
cash provided by operating activities
|
|
9,769
|
|
25,266
|
|
62,716
|
|
78,107
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment and intangible assets
|
|
(3,842)
|
|
(1,572)
|
|
(7,753)
|
|
(10,264)
|
Proceeds
from sale of property and equipment
|
|
(2)
|
|
9
|
|
100
|
|
83
|
Dividends
received
|
|
0
|
|
(339)
|
|
0
|
|
0
|
Cash
payments for acquisitions, net of cash acquired
|
|
(31,863)
|
|
(500)
|
|
(38,899)
|
|
(4,447)
|
Net
cash provided by investing activities
|
|
(35,707)
|
|
(2,402)
|
|
(46,552)
|
|
(14,628)
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Payment of
contingent consideration
|
|
0
|
|
(11,240)
|
|
(2,784)
|
|
(11,240)
|
Payment of
deferred purchase consideration
|
|
0
|
|
0
|
|
0
|
|
(1,900)
|
Proceeds
from long-term debt net of discount
|
|
0
|
|
0
|
|
230,285
|
|
0
|
Debt
issuance costs
|
|
(75)
|
|
0
|
|
(6,581)
|
|
0
|
Proceeds
from issuance of ordinary shares
|
|
0
|
|
0
|
|
0
|
|
64,000
|
Share
issuance costs
|
|
0
|
|
(262)
|
|
0
|
|
(8,302)
|
Proceeds
from exercise of share options
|
|
0
|
|
0
|
|
0
|
|
347
|
Excess tax
benefit
|
|
0
|
|
674
|
|
0
|
|
674
|
Repayment
of principal on long-term borrowings
|
|
0
|
|
(46,675)
|
|
(1,125)
|
|
(76,050)
|
(Increase)
decrease in restricted cash
|
|
0
|
|
34
|
|
1,333
|
|
(527)
|
Dividends
paid
|
|
(1,802)
|
|
0
|
|
(228,091)
|
|
(2,555)
|
Repurchase
of own shares
|
|
0
|
|
(3,869)
|
|
0
|
|
(3,869)
|
Repurchases of share options from
employees
|
|
0
|
|
(114)
|
|
0
|
|
(1,022)
|
Net
cash provide by financing activities
|
|
(1,877)
|
|
(61,452)
|
|
(6,963)
|
|
(40,444)
|
Effect of
exchange rate fluctuations on cash and cash equivalents
|
|
(901)
|
|
1,566
|
|
941
|
|
2,928
|
Change
in cash and cash equivalents
|
|
(28,716)
|
|
(37,022)
|
|
10,142
|
|
25,963
|
Beginning cash and cash equivalents
|
|
102,004
|
|
123,725
|
|
63,146
|
|
60,740
|
Ending
cash and cash equivalents
|
$
|
73,288
|
$
|
86,703
|
$
|
73,288
|
$
|
86,703
|
Supplemental cash flow disclosures:
|
|
|
|
|
|
|
|
|
Income
taxes paid
|
$
|
(2,075)
|
$
|
(3,440)
|
$
|
(4,702)
|
$
|
(6,028)
|
Interest
paid
|
$
|
(4,512)
|
$
|
(3,842)
|
$
|
(9,022)
|
$
|
(12,715)
|
Suplemental non-cash disclosures:
|
|
|
|
|
|
|
|
|
Issuance
of ordinary shares on conversion of Class D preferred
shares
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
191,954
|
|
|
|
|
|
|
|
|
|
AVG
Technologies N.V.
|
Reconciliation of GAAP Measures to Non-GAAP
Measures
|
(In
thousands, except revenue per average active user
data)
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended
|
|
Nine
months ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
Net cash
provided by operating activities
|
$
|
9,769
|
$
|
25,266
|
$
|
62,716
|
$
|
78,107
|
Less:
Payments for property and equipment and intangible
assets
|
|
(3,842)
|
|
(1,572)
|
|
(7,753)
|
|
(10,264)
|
Add:
Interest expense net (1)
|
|
4,673
|
|
3,458
|
|
10,153
|
|
11,444
|
Unlevered free cash flow, adjusted
|
$
|
10,600
|
$
|
27,152
|
$
|
65,116
|
$
|
79,287
|
|
|
|
|
|
|
|
|
|
(1) The
tax adjustment for interest expense is based on an assumed tax rate
of approximately 10%, which is a blended rate based on internal
estimates of what the Company's effective tax rate will be for the
respective periods. Beginning in the quarter ended March 31, 2012,
for interest expense the Company is using interest paid from the
cash flow statement to calculate unlevered free cash flow. For
prior periods, for interest expense the Company has continued to
use interest expense from the income statement (which includes
amortization of financing costs and loan discount). The Company has
not adjusted the presentation for prior periods as this change in
presentation of unlevered free cash flow, adjusted would not have
had a material impact.
|
Revenue
|
$
|
71,170
|
$
|
95,253
|
$
|
198,093
|
$
|
260,761
|
Unlevered
free cash flow, adjusted
|
|
10,600
|
|
27,152
|
|
65,116
|
|
79,287
|
Cash
conversion
|
|
15%
|
|
29%
|
|
33%
|
|
30%
|
|
|
|
|
|
|
|
|
|
Total
revenue (in thousands)
|
$
|
71,170
|
$
|
95,253
|
$
|
198,093
|
$
|
260,761
|
Active
users at period end (in millions)
|
|
106
|
|
143
|
|
106
|
|
143
|
Average
active users (in millions) (1)
|
|
102
|
|
136
|
|
103
|
|
126
|
Three/nine months revenue per average active
user
|
$
|
0.70
|
$
|
0.70
|
$
|
1.92
|
$
|
2.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve
months ended
|
|
|
|
|
September 30,
|
|
|
|
|
|
|
2011
|
|
2012
|
Total
revenue (in thousands)
|
|
|
|
|
$
|
255,521
|
$
|
335,060
|
Active
users at period end (in millions)
|
|
|
|
|
|
106
|
|
143
|
Average
active users (in millions) (1)
|
|
|
|
|
|
102
|
|
125
|
Rolling
twelve months revenue per average active user
|
|
|
|
|
$
|
2.51
|
$
|
2.68
|
|
|
|
|
|
|
|
|
|
(1) The
number of average active users is calculated as the simple average
of active users at the beginning of a period and the end of a
period.
|
AVG
Technologies N. V.
|
Reconciliation of GAAP Measures to Non-GAAP
Measures
|
(In
thousands except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended
|
|
Nine
months ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
Gross
profit
|
$
|
61,986
|
$
|
79,911
|
$
|
174,289
|
$
|
220,950
|
Add
back:
|
|
|
|
|
|
|
|
|
- Share
based compensation
|
|
5
|
|
(12)
|
|
17
|
|
1
|
-
Acquisition amortization
|
|
897
|
|
1,051
|
|
1,588
|
|
3,264
|
Non-GAAP adjusted gross profit
|
$
|
62,888
|
$
|
80,950
|
$
|
175,894
|
$
|
224,215
|
Revenue
|
$
|
71,170
|
$
|
95,253
|
$
|
198,093
|
$
|
260,761
|
Non-GAAP adjusted gross profit
margin
|
|
88%
|
|
85%
|
|
89%
|
|
86%
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
$
|
46,357
|
$
|
50,915
|
$
|
114,366
|
$
|
151,279
|
Less:
|
|
|
|
|
|
|
|
|
-
Share-based compensation
|
|
(1,184)
|
|
(2,739)
|
|
(2,995)
|
|
(10,752)
|
-
Acquisition amortization
|
|
(63)
|
|
(831)
|
|
(972)
|
|
(2,666)
|
Non-GAAP adjusted operating
expenses
|
$
|
45,110
|
$
|
47,345
|
$
|
110,399
|
$
|
137,861
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
15,629
|
$
|
28,996
|
$
|
59,923
|
$
|
69,671
|
Add
back:
|
|
|
|
|
|
|
|
|
- Share
based compensation
|
|
1,189
|
|
2,727
|
|
3,012
|
|
10,753
|
-
Acquisition amortization
|
|
960
|
|
1,882
|
|
2,560
|
|
5,930
|
Non-GAAP adjusted operating income
|
$
|
17,778
|
$
|
33,605
|
$
|
65,495
|
$
|
86,354
|
Revenue
|
$
|
71,170
|
$
|
95,253
|
$
|
198,093
|
$
|
260,761
|
Non-GAAP adjusted operating income
margin
|
|
25%
|
|
35%
|
|
33%
|
|
33%
|
|
|
|
|
|
|
|
|
|
Net
income
|
$
|
6,660
|
$
|
18,963
|
$
|
99,677
|
$
|
40,916
|
Add
back:
|
|
|
|
|
|
|
|
|
- Share
based compensation
|
|
1,189
|
|
2,727
|
|
3,012
|
|
10,753
|
-
Acquisition amortization
|
|
960
|
|
1,882
|
|
2,560
|
|
5,930
|
- Benefit
(Provision) for income taxes
|
|
3,373
|
|
3,581
|
|
(52,212)
|
|
10,845
|
Adjusted
profit before taxes
|
|
12,182
|
|
27,153
|
|
53,037
|
|
68,444
|
Less: Tax
effect (1)
|
|
(1,705)
|
|
(3,786)
|
|
(7,425)
|
|
(9,582)
|
Non-GAAP adjusted net income
|
$
|
10,477
|
$
|
23,367
|
$
|
45,612
|
$
|
58,862
|
|
|
|
|
|
|
|
|
|
(1)
Adjusted for impact of normalized tax rate of 14%.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares outstanding -
diluted
|
|
39,138
|
|
54,710
|
|
38,838
|
|
54,231
|
Add back:
Class D preferred shares
|
|
12,000
|
|
0
|
|
12,000
|
|
0
|
Non-GAAP fully diluted shares
|
|
51,138
|
|
54,710
|
|
50,838
|
|
54,231
|
Non-GAAP
adjusted net income
|
$
|
10,477
|
$
|
23,367
|
$
|
45,612
|
$
|
58,862
|
Non-GAAP EPS, diluted
|
$
|
0.20
|
$
|
0.43
|
$
|
0.90
|
$
|
1.09
|
|
|
|
|
|
|
|
|
|
Share-Based Compensation
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended
|
|
Nine
months ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
Cost of
revenue
|
$
|
(5)
|
$
|
12
|
$
|
(17)
|
$
|
(1)
|
Sales and
Marketing
|
|
586
|
|
(582)
|
|
(614)
|
|
(1,687)
|
Research
and Development
|
|
(222)
|
|
(214)
|
|
(1,019)
|
|
(1,274)
|
General
and Administrative
|
|
(1,548)
|
|
(1,943)
|
|
(1,362)
|
|
(7,791)
|
Share-based compensation
|
$
|
(1,189)
|
$
|
(2,727)
|
$
|
(3,012)
|
$
|
(10,753)
|
|
|
|
|
|
|
|
|
|
Acquisition Amortization
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Three
months ended
|
|
Nine
months ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
Cost of
revenue
|
$
|
(897)
|
$
|
(1,051)
|
$
|
(1,588)
|
$
|
(3,264)
|
Sales and
Marketing
|
|
(338)
|
|
(829)
|
|
(917)
|
|
(2,660)
|
Research
and Development
|
|
275
|
|
(2)
|
|
(55)
|
|
(6)
|
Acquisition amortization
|
$
|
(960)
|
$
|
(1,882)
|
$
|
(2,560)
|
$
|
(5,930)
|
|
|
|
|
|
|
|
|
|
AVG
Technologies N.V.
|
Reconciliation of GAAP Measures to Non-GAAP
Measures
|
|
|
|
|
|
|
|
|
|
Notes to Non-GAAP
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Company's profit and loss tax charge varies from period to period
and has shown significant variations from its cash tax charge. In
particular, the Company's entry into an innovation tax regime in
the Netherlands resulted in a significant tax credit in June 2011,
which will be reversed in future periods. In order to remove the
period to period impact of these variations, the Company has used
an estimated normalized tax rate of approximately 14% in its
historic financial reporting and future projections to better
reflect the core operational changes in the business. The
normalized tax rate of approximately 14% is based on an estimate of
the Company's future cash tax rate as well as its recent cash and
income statement tax charges. The tax rate reflected on the income
statement for 2009 and 2010 was on average approximately 12.7% and
the tax paid reflected on the cash flow statement in 2011 was
approximately 13% with the tax rate reflected on the cash flow
statement over the last three full fiscal years being approximately
17%.
|
|
|
|
|
|
|
|
|
|
Preferred Share Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During
the 2011 fiscal year the Company had 12 million preferred
shares which were entitled to a preferred dividend of approximately
$1.8 million per calendar quarter, as well as their pro rata amount
of net income assuming distribution to each separate class of
shareholder. These shares were excluded from calculations of
net income available to ordinary shareholders. At the time of
the Initial Public Offering these shares converted to ordinary
shares on a 1 for 1 basis, and preferred dividends are no longer
payable. In order to reflect the underlying income attributable to
ordinary shareholders in the non-GAAP calculation of adjusted net
income per diluted share, the Company has included net income
available to all shareholders, including the holders of preferred
shares. The Company believes that these non-GAAP adjustments will
allow it to present core financial trends more consistently during
the periods before and after conversion of the preferred shares to
ordinary shares.
|
SOURCE AVG Technologies N.V.