Pervasive Software(R) Inc. (NASDAQ:PVSW), a global value leader
in embeddable data management and data integration software and in
enabling next generation analytics, today announced financial
results for the third quarter ending March 31, 2010.
For the third quarter ended March 31, 2010:
- Revenue was $11.7 million,
compared to $13.0 million for the third quarter of last fiscal
year. As a reminder, results for the March quarter of the previous
fiscal year included one relatively large transaction with a
database customer representing approximately $3.0 million in
revenue.
- Net income was $1.0 million, or
$0.06 diluted earnings per share, compared to net income of $1.9
million, or $0.10 diluted earnings per share, for the third quarter
of last fiscal year.
- On a non-GAAP basis, as
described below, Pervasive realized net income of $1.3 million, or
$0.07 diluted earnings per share, compared to net income of $2.1
million, or $0.11 diluted earnings per share, in the third quarter
of last fiscal year. Non-GAAP results exclude amortization of
purchased intangibles and stock-based compensation expense, and
assume a non-GAAP effective tax rate of 34%.
Pervasive continued to generate positive cash flow from
operations with $2.2 million in the third quarter of fiscal 2010,
ending the quarter with approximately $42.4 million in cash and
marketable securities. Pervasive acquired approximately 252,000
shares of Pervasive common stock on the open market at a total cost
of approximately $1.3 million, or approximately $5.05 weighted
average price per share, during the quarter ended March 31, 2010.
The Company has more than $5.0 million authorized repurchase funds
remaining under its $10.0 million stock repurchase program
announced in March 2009. Depending on market conditions and other
factors, such purchases may be commenced or suspended at any time
without prior notice. Issued and outstanding shares of common stock
as of March 31, 2010 totaled approximately 17.6 million.
“Financial highlights for the March quarter include record
revenue and record bookings delivered by our integration products
team, resulting in our 37th consecutive quarter of profitability
and a record level of deferred revenue on our balance sheet,” said
John Farr, president and CEO, Pervasive Software. “Good execution
by all of our product teams, both financially and operationally, is
paving the way to upgraded product releases in the coming quarters,
beginning later this summer with the newest multicore-ready update
of our Pervasive PSQL embedded database technology.”
Business Outlook
As previously stated in guidance provided on April 5, 2010,
Pervasive expects revenue for the fourth fiscal quarter ending June
30, 2010 to be in the range of $11.0 million to $12.0 million and
GAAP-basis diluted earnings per share of $0.03 to $0.06, compared
to $11.1 million revenue and $0.06 diluted earnings per share for
the June quarter of the previous fiscal year.
GAAP-basis profitability is expected to include amortization of
purchased intangibles and stock-based compensation expense
representing approximately $0.6 million, pre-tax, in the fourth
quarter of fiscal year 2010. The company expects non-GAAP
adjustments to result in non-GAAP diluted and fully taxed earnings
per share of approximately $0.05 to $0.08 in the June quarter,
compared to $0.07 non-GAAP diluted and fully taxed earnings per
share for the June quarter of the previous fiscal year.
Regularly Scheduled Earnings Release Conference Call - April
20, 2010
Pervasive will provide the full financial results for its third
quarter ending March 31, 2010 in its regularly scheduled earnings
release conference call on April 20, 2010 at 5:00 P.M. Eastern
time. The dial-in numbers for the call are 877-808-2426 (toll-free)
or 973-200-3975 (international). The conference name is "Pervasive
Software Inc." The conference call may also be accessed live over
the Web at http://investor.pervasive.com/events.cfm. Check the Web
site before the call for login information. Replay will be
available 8:00 P.M. Eastern Tuesday, April 20, to midnight,
Tuesday, April 27, by dialing 800-642-1687 (toll-free) or
706-645-9291 (international), and selecting Conference ID 65090916.
Additionally, the Webcast will be archived on Pervasive's Web site
at http://investor.pervasive.com/events.cfm.
About Pervasive Software
Pervasive Software (NASDAQ:PVSW) helps companies get the most
out of their data investments through agile and embeddable software
and SaaS services for data management, data integration, B2B
exchange and analytics. The embeddable Pervasive PSQL™ database
engine provides robust database reliability in a near-zero database
administration environment for packaged business applications.
Pervasive's multi-purpose data integration platform, available
on-premises and in the cloud, accelerates the sharing of
information between multiple data stores, applications, and hosted
business systems and allows customers to re-use the same software
for diverse integration scenarios. Pervasive DataRush™ is an
embeddable parallel-processing platform enabling data-intensive
applications such as claims processing, risk analysis, fraud
detection, data mining, predictive analytics, sales optimization
and marketing analytics. For more than two decades, Pervasive
products have delivered value to tens of thousands of customers in
more than 150 countries with a compelling combination of
performance, flexibility, reliability and low total cost of
ownership. Through Pervasive Innovation Labs, the company also
invests in exploring and creating cutting edge solutions for the
toughest data analysis and data delivery challenges. Robin Bloor,
Chief Research Analyst and President, The Bloor Group and Founder,
Bloor Research, recently cited Pervasive as one of the "10 IT
Companies to Watch in 2010." For additional information, go to
www.pervasive.com.
About Non-GAAP Financial Information
This press release includes non-GAAP financial measures. For a
description of these non-GAAP financial measures, including the
reasons management uses each measure, and reconciliations of these
non-GAAP financial measures to the most directly comparable
financial measures prepared in accordance with Generally Accepted
Accounting Principles (GAAP), please see the section entitled
"About Non-GAAP Financial Measures" and the accompanying tables
entitled "Reconciliation of GAAP Measures to Non-GAAP" and
"Reconciliation of Forward-Looking Guidance."
Cautionary Statement
This document contains forward-looking statements that involve
risks and uncertainties concerning the company, including the
company's expected performance for the fourth quarter ending June
30, 2010, and the company's strategy and profitability going
forward. Actual events or results may differ materially from those
described in this document due to a number of risks and
uncertainties. These risks and uncertainties include, among others,
the company's ability to attract and retain existing and/or new
customers; the company's ability to issue new products or releases
of solutions that meet customers' needs or achieve acceptance by
the company's customers; changes to current accounting policies
which may have a significant, adverse impact upon the company's
financial results; the introduction of new products by competitors
or the entry of new competitors; the company's ability to preserve
its key strategic relationships; the company's ability to hire and
retain key employees; and economic and political conditions in the
U.S. and abroad. All of these factors may result in significant
fluctuations in the company's quarterly operating results and/or
its ability to sustain or increase its profitability. Additional
information regarding these and other factors can be found in
Pervasive's reports filed with the Securities and Exchange
Commission, including its Form 10-Q for the fiscal quarter ended
December 31, 2009. Pervasive is not obligated to update these
forward-looking statements to reflect events or circumstances after
the date of this document.
All Pervasive brand and product names are trademarks or
registered trademarks of Pervasive Software Inc. in the United
States and other countries. All other marks are the property of
their respective owners.
Pervasive Software Inc. Condensed Consolidated Balance
Sheets (in thousands)
March 31, June 30, 2010 2009
(Unaudited)
ASSETS Current assets: Cash and cash equivalents
$ 8,413 $ 18,029 Marketable securities 33,968 25,381 Trade accounts
receivable, net 8,077 7,852 Deferred tax assets, net 689 818
Prepaid expenses and other current assets 1,065 1,227
Total current assets 52,212 53,307 Property and equipment,
net 1,324 1,474 Purchased technology, net 2,272 22 Goodwill
38,508 38,508 Deferred tax assets, net 1,385 1,169 Other assets
196 226 Total assets $ 95,897 $ 94,706
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable and accrued liabilities $ 4,713 $
5,372 Deferred revenue 7,130 6,342 Total current
liabilities 11,843 11,714 Stockholders' equity 84,054
82,992 Total liabilities and stockholders' equity $
95,897 $ 94,706
Pervasive Software Inc. Condensed
Consolidated Statements of Operations (in thousands, except
per share data) (Unaudited)
Three months ended Nine months ended
March 31 March 31 2010 2009
2010 2009 Revenues: Product licenses $ 7,552 $
9,353 $ 23,280 $ 24,670 Services and other 4,133
3,689 12,213 11,448 Total
revenue 11,685 13,042 35,493 36,118 Costs and expenses: Cost
of product licenses 317 214 874 1,132 Cost of services and other
1,212 1,157 3,594 3,546 Sales and marketing 4,772 4,923 14,048
14,029 Research and development 2,895 2,761 8,813 7,867 General and
administrative 1,164 1,435 3,719
4,126 Total costs and expenses 10,360
10,490 31,048 30,700
Operating income 1,325 2,552 4,445 5,418
Interest and other income, net 33 171 182 556 Income tax provision
(358 ) (840 ) (1,386 ) (1,649 ) Net
income $ 1,000 $ 1,883 $ 3,241 $ 4,325
Diluted earnings per share: $ 0.06
$ 0.10 $ 0.18 $ 0.23
Shares used in computing diluted earnings per share
17,484
18,113 17,653 18,508
Pervasive Software Inc. Condensed
Consolidated Statements of Cash Flows (in thousands)
(Unaudited)
Three months ended Nine months ended March 31
March 31 2010 2009
2010 2009
Cash from operations Net income $ 1,000 $ 1,883 $ 3,241 $
4,325 Adjustments to reconcile net income to net cash provided by
operations: Depreciation & amortization 334 269 963 1,230
Non-cash stock compensation expense 445 451 1,315 1,224 Non-cash
changes in deferred tax assets 100 427 (86 ) (36 ) Changes in
current assets and liabilities: Trade accounts receivable (525 )
(1,273 ) (239 ) (1,212 ) Prepaid expenses and other current assets
68 7 170 (109 ) Accounts payable and accrued liabilities 466 746
(652 ) 692 Deferred revenue 262 (371 )
726 (170 ) Net cash provided by operations 2,150
2,139 5,438 5,944
Cash from investing activities
Purchase of property and equipment (204 ) (161 ) (374 ) (639 )
Sales and purchases of marketable securities, net (1,522 ) 2,595
(8,715 ) (15,139 ) Purchased intangibles - - (2,611 ) -
Decrease in other assets
10 10 30 65
Net cash provided by (used in) investing activities (1,716 ) 2,444
(11,670 ) (15,713 )
Cash from financing activities
Proceeds from exercise of stock options 142 - 333 24 Acquisition of
Treasury Stock (1,357 ) (2,747 ) (3,675 )
(6,442 ) Net cash used in financing activities (1,215 )
(2,747 ) (3,342 ) (6,418 ) Effect of exchange rate on cash
and cash equivalents (40 ) (63 ) (42 )
(65 ) Increase (decrease) in cash and cash equivalents (821 ) 1,773
(9,616 ) (16,252 ) Cash and cash equivalents at beginning of period
9,234 15,165 18,029
33,190 Cash and cash equivalents at end of period $
8,413 $ 16,938 $ 8,413 $ 16,938
About Non-GAAP Financial Measures
The Company provides non-GAAP measures for net income and net
income per share data as supplemental information regarding the
Company's core business operational performance. The Company
believes that these non-GAAP financial measures are useful to
investors because they exclude certain non-operating or
non-recurring charges. The Company's management excludes these
non-operating or non-recurring charges when it internally evaluates
the performance of the Company's business and makes operating
decisions, including internal budgeting, performance measurement
and the calculation of bonuses and discretionary compensation. In
addition, these non-GAAP measures more closely reflect the
essential revenue generation activities of the Company and the
direct operating expenses (resulting in or from cash expenditures)
needed to perform these revenue generating activities. Accordingly,
management excludes the amortization of purchased intangible assets
related to acquisitions and stock-based compensation related to
employee stock options.
The Company believes that providing the non-GAAP measures that
management uses is useful to investors for two primary reasons.
First, it provides a consistent basis for investors to understand
the Company's financial performance on a trended basis across many
historical periods, particularly given the adoption of SFAS 123R at
the beginning of fiscal year 2006 and the changes it has introduced
for calculating stock-based compensation expenses relative to prior
periods. And second, it allows investors to evaluate the Company's
performance using the same methodology and information as that used
by the Company's management.
Non-GAAP measures are subject to material limitations as these
measures are not in accordance with, or a substitute for, US GAAP
and therefore the Company's definition or interpretation may be
different from similar non-GAAP measures used by other companies
and independent financial analysts. However, the Company's
management compensates for these limitations by providing the
relevant and detailed disclosure of the items excluded in the
calculation of non-GAAP net income and non-GAAP diluted earnings
per share, which should be supplementally considered when
evaluating the Company's results. In addition, items such as
amortization of purchased intangibles, stock compensation charges
and significant and non-recurring items that are excluded from
non-GAAP net income and non-GAAP diluted earnings per share can
have a significant impact on earnings. Management compensates for
these limitations by evaluating the non-GAAP measure together with
the most directly comparable GAAP measure. The Company has
historically provided non-GAAP measures to the investment community
as a supplement to its GAAP results, to enable investors to
evaluate the Company's core operating performance the way
management does. The non-GAAP adjustments, and the basis for
excluding them, are outlined below:
Amortization of Purchased Intangibles
The Company has recorded amortization of acquired intellectual
property intangibles, included in its GAAP financial statements,
related to the acquisitions of Data Junction and assets of
ChanneLinx, Inc. Management excludes these items for purposes of
calculating non-GAAP net income and non-GAAP diluted earnings per
share. The Company believes that eliminating this expense in
determining its non-GAAP measures is useful to investors because
doing so provides a consistent basis for investors to understand
the Company's financial performance on a trended basis across many
historical periods, it allows investors to evaluate the Company's
performance using the same methodology and information as that used
by the Company's management, and it allows a comparison with other
peer companies in the software industry, many of whom use similar
non-GAAP financial measures to supplement their GAAP results.
Finally, the Company believes that non-GAAP measures of
profitability that exclude amortization of acquired intellectual
property intangibles are widely used by analysts and investors in
the software industry.
Stock-based Compensation Expense
The Company has incurred stock-based compensation expense as
determined under SFAS 123R for the quarters ending on or after
September 30, 2005, and under APB 25 for earlier comparable periods
in its GAAP financial results. Since stock-based compensation is a
non-cash charge, the Company excludes this item for the purposes of
calculating non-GAAP net income and non-GAAP diluted earnings per
share. In addition, the exclusion of stock-based compensation from
the non-GAAP measures is done to allow a consistent basis for
investors to understand the Company's financial performance on a
trended basis across many historical periods, allow investors to
evaluate the Company's performance using the same methodology and
information as that used by the Company's management, and allow a
comparison with other peer companies in the software industry, many
of whom use similar non-GAAP financial measures to supplement their
GAAP results. The very nature of the stock-based compensation
expense also makes it very difficult to estimate prospectively,
since the expense will vary with changes in the stock price and
market conditions at the time of new grants, varying valuation
methodologies, subjective assumptions and different award types,
making the comparison of current results with forward-looking
guidance potentially difficult for investors to interpret. The tax
effects of stock-based compensation expenses may also vary
significantly from period to period, without any change in
underlying operational performance, thereby obscuring the
underlying profitability of core revenue-generating operations
relative to prior periods (including prior periods following the
adoption of SFAS 123R). Finally, the Company believes that non-GAAP
measures of profitability that exclude stock-based compensation are
widely used by analysts and investors in the software industry.
Income Tax Adjustment
Income taxes represent a complex element of any company's income
statement and effective tax rates can vary widely from year to year
and from company to company, especially in periods in which
adjustments are made to a company's valuation reserve for deferred
tax assets. The Company uses a statutory tax rate of 34% to reflect
income tax adjustments in presentation of its non-GAAP net income
and non-GAAP diluted earnings per share. Utilization of a statutory
tax rate for presentation of the non-GAAP measures is done to allow
a consistent basis for investors to understand the Company's
financial performance on a trended basis across many historical
periods, allow investors to evaluate the Company's performance
using the same methodology and information as that used by the
Company's management, and allow a comparison with other peer
companies in the software industry, many of whom use similar
non-GAAP financial measures to supplement their GAAP results.
Finally, the Company believes that non-GAAP measures of
profitability that are based on more standardized statutory tax
rates are widely used by analysts and investors in the software
industry.
Pervasive Software Inc. Reconciliation of GAAP Measures
to Non-GAAP (in thousands, except per share data)
(Unaudited)
Three months ended Nine months ended March 31,
March 31, 2010 2009 2010
2009 Net Income Net Income Net Income
Net Income GAAP $ 1,000 $ 1,883 $ 3,241 $ 4,325
Amortization of intangible assets - cost of product licenses 130 -
347 528 Stock-based compensation - cost of services and other 11 9
34 29 Stock-based compensation - sales and marketing expense 138
128 401 295 Stock-based compensation - research and development
expense 62 40 175 121 Stock-based compensation - general and
administrative expense 234 274 706 779 Income tax adjustment for
non-GAAP $ (299 ) $ (239 ) (754 ) (977 )
Non-GAAP $ 1,276 $ 2,095 $ 4,150 $
5,100 GAAP net income per share - diluted $ 0.06 $
0.10 $ 0.18 $ 0.23 Non-GAAP net income per share - diluted $
0.07 $ 0.11 $ 0.23 $ 0.27 Shares used to compute GAAP net
income per share - diluted
17,484
18,113 17,653 18,508 Shares used to compute non-GAAP net
income per share - diluted
18,160
18,692 18,319 18,870
Pervasive Software Inc.
Reconciliation of Forward-Looking Guidance
(Unaudited)
Diluted Earnings per Share Range Three months
ended June 30, 2010 GAAP expectation $ 0.03 $
0.06 Adjustment to exclude amortization of purchased
intangibles * * Adjustment to exclude stock-based
compensation expense $ 0.02 $ 0.02 Adjustment to tax
non-GAAP results at a consistent 34% rate * *
Non-GAAP expectation $ 0.05 $ 0.08
* rounds to zero
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