Pervasive Software® Inc. (NASDAQ: PVSW), a global leader in
cloud-based and on-premises data innovation, today announced
updated guidance for financial results for the second quarter
ending December 31, 2011, providing a more narrow range than that
of guidance provided on October 25, 2011.
Based on preliminary unaudited financial results, the company
now expects total revenue for the second quarter to be in the range
of $11.8 to $12.0 million and GAAP-basis diluted earnings per share
of $0.02 to $0.03, representing Pervasive’s forty-fourth
consecutive profitable quarter. Guidance for the second quarter
provided in the company’s October 25, 2011 press release was for
revenue in the range of $11.4 million to $12.4 million and
GAAP-basis diluted earnings per share of $0.01 to $0.04. Revenue
and GAAP-basis diluted earnings per share for the December quarter
of last fiscal year were $11.7 million and $0.03, respectively.
On a non-GAAP basis, Pervasive expects to realize diluted
earnings per share of $0.04 to $0.05. Guidance for the second
quarter given in the company’s October 25, 2011 press release was
for non-GAAP diluted earnings per share of approximately $0.03 to
$0.06, compared to $0.05 non-GAAP diluted and fully taxed earnings
per share for the December quarter of the previous 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 expects to report positive cash flow from operations
with approximately $2.3 million in the second quarter, ending the
quarter with approximately $41.3 million in cash and marketable
securities. Pervasive acquired approximately 82,000 shares of
Pervasive common stock on the open market at a total cost of
approximately $0.5 million, or approximately $6.12 weighted average
price per share, during the quarter ended December 31, 2011. The
company has approximately $2.5 million authorized repurchase funds
remaining under its $10.0 million stock repurchase program
announced in July 2010. 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 December 31, 2011 totaled approximately 16.2 million.
"We executed well in the December quarter, which will represent
our 44th consecutive quarter of profitability," said John Farr,
president and CEO, Pervasive Software. "I'm particularly pleased
that our core integration products team grew revenue from the
December quarter of prior year and in doing so will achieve a new
record for quarterly revenue from our integration products and
services. Going forward, we remain committed to profitability while
also continuing our strategic investments both in our core database
and integration product lines as well as in our emerging Cloud and
Big Data-focused businesses."
Business Outlook
For the third fiscal quarter ending March 31, 2012, Pervasive
expects revenue to be in the range of $11.5 million to $12.5
million and GAAP-basis diluted earnings per share of $0.01 to
$0.04, compared to $12.1 million revenue and $0.05 diluted earnings
per share for the March 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 third
quarter of fiscal year 2012. The company expects non-GAAP
adjustments to result in non-GAAP diluted and fully taxed earnings
per share of approximately $0.03 to $0.06 in the March quarter,
compared to $0.06 non-GAAP diluted and fully taxed earnings per
share for the March quarter of the previous fiscal year.
Regularly Scheduled Earnings Release Conference Call –
January 24, 2012
Pervasive will provide the full financial results for its second
quarter ending December 31, 2011 in its regularly scheduled
earnings release conference call on January 24, 2012 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.
Please go to the website at least 15 minutes prior to the call to
register, download and install any necessary audio software. For
those who cannot attend the live broadcast, a replay will be
available 8:00 p.m. Eastern Tuesday, January 24, to midnight,
Tuesday, January 31, by dialing 855-859-2056 (toll-free) or
404-537-3406 (international), and selecting Conference ID 39317338.
Additionally, the Webcast will be archived on Pervasive's Web site
at http://investor.pervasive.com/events.cfm.
About Pervasive Software
Pervasive is a global data innovation leader, delivering
software to manage, integrate and analyze data, in the cloud or
on-premises, throughout the entire data lifecycle. Pervasive
products deliver value to tens of thousands of customers worldwide,
often embedded within partners’ software, with breakthrough
performance, flexibility, reliability and return on investment. 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 table
entitled "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 third quarter ending March
31, 2012, and the second quarter ending December 31, 2011.
Pervasive emphasizes that the expected results for the quarter
ending December 31, 2011 are preliminary and that actual results
could vary when the company reports final revenue and earnings for
the second quarter on January 24, 2012 at 5 p.m. Eastern time.
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 US 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 September 30,
2011. 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.
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. 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 acquisition of 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 ASC 718 (formerly 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 ASC 718, formerly 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 Forward-Looking
Guidance (Unaudited)
Diluted Earnings per Share Range Three months
ended December 31, 2011 GAAP expectation $ 0.02 $
0.03 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 $ 0.04 $
0.05
Diluted Earnings per Share Range
Three months ended March 31, 2012 GAAP
expectation $ 0.01 $ 0.04 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 $ 0.03 $ 0.06 * rounds to zero
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