Pervasive Software® Inc. (NASDAQ: PVSW), a global leader in
cloud-based and on-premises data innovation, today announced
financial results for the second quarter ending December 31,
2011.
For the second quarter ended December 31, 2011:
- Revenue was $11.9 million, consistent
with updated expectations communicated on January 16, 2012, and
compared to $11.7 million for the second quarter of last fiscal
year.
- Net income was $0.5 million, or $0.03
diluted earnings per share, consistent with updated expectations
communicated on January 16, 2012, and compared to net income of
$0.4 million, or $0.03 diluted earnings per share, for the second
quarter of last fiscal year.
- On a non-GAAP basis, as described
below, Pervasive realized net income of $0.8 million, or $0.05
diluted earnings per share, consistent with updated expectations
communicated on January 16, 2012, and compared to net income of
$0.8 million, or $0.05 diluted earnings per share, in the second
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 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 $2.6 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 represents our
44th consecutive quarter of profitability," said John Farr,
president and CEO, Pervasive Software. "I'm particularly pleased
that our core integration products team once again grew year over
year quarterly revenue, as it has now done for nine consecutive
quarters, and in doing so has achieved a new record for quarterly
revenue from our integration products and services in the December
quarter. Integration revenue represented approximately 43% of our
total revenue in the December quarter. Our balance sheet continues
to be incredibly strong with over $41 million in cash and
marketable securities, a new record deferred revenue balance of
$8.1 million and no debt. 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
As previously stated in guidance provided on January 16, 2012,
Pervasive expects revenue for the third fiscal quarter ending March
31, 2012, 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 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 third quarter ending March
31, 2012, 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
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.
Pervasive Software Inc. Condensed Consolidated Balance
Sheets (in thousands)
December 31, June 30, 2011 2011
(Unaudited)
ASSETS Current assets: Cash and cash equivalents
$ 9,142 $ 8,280 Marketable securities 32,151 30,226 Trade accounts
receivable, net 7,460 8,374 Deferred tax assets, net 1,083 944
Prepaid expenses and other current assets 1,593 1,602
Total current assets 51,429 49,426 Property and equipment,
net 1,380 1,322 Purchased intangibles 1,349 1,613 Goodwill
38,508 38,508 Deferred tax assets, net 1,900 1,833 Other assets
368 483 Total assets $ 94,934 $ 93,185
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable and accrued liabilities $ 5,661 $
5,654 Deferred revenue 8,107 7,757 Total current
liabilities 13,768 13,411 Stockholders' equity 81,166
79,774 Total liabilities and stockholders' equity $
94,934 $ 93,185
Pervasive Software Inc.
Condensed Consolidated Statements of
Income
(in thousands, except per share data) (Unaudited)
Three months ended Six
months ended December 31 December 31
2011 2010 2011 2010 Revenues:
Product licenses $ 7,229 $ 7,119 $ 14,846 $ 13,773 Services and
other 4,651 4,538 8,761
8,875 Total revenue 11,880 11,657 23,607 22,648
Costs and expenses: Cost of product licenses 349 354 717 659
Cost of services and other 1,491 1,242 2,848 2,444 Sales and
marketing 4,933 5,316 9,865 9,919 Research and development 3,033
2,845 6,119 5,704 General and administrative 1,526
1,318 3,279 2,584 Total
costs and expenses 11,332 11,075
22,828 21,310 Operating income 548 582
779 1,338 Interest and other income, net 18 14 34 24 Income
tax provision (60 ) (174 ) (124 ) (437 )
Net income $ 506 $ 422 $ 689 $ 925
Diluted earnings per share $ 0.03 $
0.03 $ 0.04 $ 0.06 Shares used
in computing diluted earnings per share 16,151 15,894 16,211 16,024
Pervasive Software Inc. Condensed
Consolidated Statements of Cash Flows (in thousands)
(Unaudited) Three months
ended Six months ended December 31 December
31 2011 2010 2011 2010
Cash from operations Net income $ 506 $ 422 $ 689 $
925 Adjustments to reconcile net income to net cash provided by
operations: Depreciation & amortization 327 336 684 671
Non-cash stock compensation expense 468 431 913 866 Non-cash
changes in deferred tax assets (255 ) (791 ) (206 ) (517 ) Other
non-cash adjustments - 49 - 156 Changes in current assets and
liabilities: Trade accounts receivable 440 (570 ) 907 (678 )
Prepaid expenses and other current assets (101 ) 566 231 579
Accounts payable and accrued liabilities 268 1,290 (692 ) 840
Deferred rent and lease related accruals 308 (97 ) 616 (196 )
Deferred revenue 307 (93 ) 359
376 Net cash provided by operations 2,268 1,543 3,501
3,022
Cash from investing activities Purchase of
property and equipment (124 ) (196 ) (482 ) (345 ) Sales and
purchases of marketable securities, net 2,514 (2,953 ) (1,916 )
4,331 Decrease in other assets 2 8
4 18 Net cash provided by (used in)
investing activities 2,392 (3,141 ) (2,394 ) 4,004
Cash
from financing activities Proceeds from exercise of stock
options 97 236 488 407 Acquisition of treasury stock (505 )
(308 ) (693 ) (6,286 ) Net cash used in
financing activities (408 ) (72 ) (205 ) (5,879 ) Effect of
exchange rate on cash and cash equivalents (30 ) (28
) (40 ) 45 Increase (decrease) in cash and
cash equivalents 4,222 (1,698 ) 862 1,192 Cash and cash equivalents
at beginning of period 4,920 9,976
8,280 7,086 Cash and cash equivalents
at end of period $ 9,142 $ 8,278 $ 9,142 $
8,278
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 GAAP Measures
to Non-GAAP (in thousands, except per share data)
(Unaudited) Three
months ended Six months ended December 31,
December 31,
2011
2010
2011
2010 Net Income Net Income Net Income
Net Income GAAP $ 506 $ 422 $ 689 $ 925 Amortization
of intangible assets - cost of product licenses 130 130 260 260
Stock-based compensation - cost of services and other 15 11 29 22
Stock-based compensation - sales and marketing expense 148 132 281
266 Stock-based compensation - research and development expense 75
61 149 127 Stock-based compensation - general and administrative
expense 229 227 453 451 Income tax adjustment for non-GAAP (334 )
(219 ) (550 ) (408 ) Non-GAAP $ 769
$ 764 $ 1,311 $ 1,643 GAAP net
income per share - diluted $ 0.03 $ 0.03 $ 0.04 $ 0.06
Non-GAAP net income per share - diluted $ 0.05 $ 0.05 $ 0.08 $ 0.10
Shares used to compute GAAP net income per share - diluted
16,151 15,894 16,211 16,024 Shares used to compute non-GAAP
net income per share - diluted 16,514 16,430
16,556
16,614
Pervasive Software Inc.
Reconciliation of Forward-Looking Guidance
(Unaudited) 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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