altr-8k_20191107.htm
false 0001701732 0001701732 2019-11-07 2019-11-07

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

 

FORM 8-K

 _____________________

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 7, 2019

 

 Altair Engineering Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

Delaware

 

001-38263

 

38-2591828

(State or other jurisdiction of incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

 

 

 

1820 E. Big Beaver Road, Troy, Michigan

 

48083

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (248) 614-2400

 

Not Applicable

(Former name or former address, if changed since last report)

__________________

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A Common Stock $0.0001 par value per share

ALTR

The NASDAQ Stock Market

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 


 

 

Item 2.02. Results of Operations and Financial Condition.

 

On November 7, 2019, Altair Engineering Inc. issued a press release disclosing its financial information and operating metrics for its third quarter and nine months ended September 30, 2019. A copy of the press release is being furnished as Exhibit 99.1 to this Report on Form 8-K.

 

The information in this Report on Form 8-K and Exhibit 99.1 attached hereto is intended to be furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

 

Item 9.01.    Financial Statements and Exhibits.

 

Exhibit 99.1

 

Press Release issued by Altair Engineering Inc. dated November 7, 2019, furnished hereto.

Exhibit 104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 



SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

 

 

ALTAIR ENGINEERING INC.

 

 

 

Date: November 7, 2019

By:

/s/ Howard N. Morof

 

 

Howard N. Morof

 

 

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

altr-ex99_6.htm

Exhibit 99.1

Altair Announces Third Quarter 2019 Financial Results

2019 Third Quarter Software Product Revenue Increased 21% year-over-year

 

TROY, Mich. – November 7, 2019 – Altair (Nasdaq:ALTR), a global technology company providing solutions in product development, high-performance computing and data intelligence, today released its financial results for the third quarter ended September 30, 2019.

“Software product revenue grew over 21% from a year ago, as we continued to execute on our vision to provide truly differentiated simulation, data analytics and high-performance cloud computing solutions that enable our customers to compete more effectively in a connected world,” said James Scapa, Founder, Chairman and Chief Executive Officer of Altair.  “Our core simulation and optimization technologies performed well during the quarter and we are highly encouraged by strong demand for our SimSolid product, which has had one of the fastest new product ramps in our history. We are also pleased to see continued strong recurring software subscription revenues.  While we are seeing some macro headwinds in our automotive market and continue to be impacted by foreign exchange challenges, our diversification across multiple verticals and products provides us with optimism that our momentum will continue into 2020 and beyond.”

Third Quarter 2019 Financial Highlights

 

Software product revenue was $77.8 million, an increase of 21% from $64.2 million for the third quarter of 2018, highlighted by 29% growth in the Americas region.

 

Non-GAAP software product revenue was $80.1 million, an increase of 25% from $64.2 million for the third quarter of 2018.  

 

Total revenue was $100.4 million, an increase of 16% from $86.8 million for the third quarter of 2018.

 

Non-GAAP total revenue was $102.7 million, an increase of 18% from $86.8 million for the third quarter of 2018.  

 

Net loss was $(15.9) million, compared to net income of $0.9 million for the third quarter of 2018. Diluted net loss per share was $(0.22) based on 71.8 million diluted weighted average common shares outstanding, compared to diluted net income per share of $0.01 for the third quarter of 2018, based on 76.7 million diluted weighted average common shares outstanding.

 

Adjusted EBITDA was $(2.3) million, compared to $2.4 million for the third quarter of 2018.  

 

Modified Adjusted EBITDA was $(0.1) million, compared to $2.4 million for the third quarter of 2018.  

 

Non-GAAP net loss was $(7.2) million, compared to $(1.4) million for the third quarter of 2018. Non-GAAP diluted net loss per share was $(0.09) based on 77.8 million non-GAAP diluted common shares outstanding, compared to non-GAAP diluted net loss per share of $(0.02) for the third quarter of 2018, based on 77.0 million non-GAAP diluted common shares outstanding.

 

Free cash flow, which consists of cash flow from operations less capital expenditures, was $(3.3) million, compared to $0.9 million for the third quarter of 2018.



Exhibit 99.1

Business Outlook

Based on information available as of today, Altair is issuing revised and reduced guidance for the fourth quarter and full year 2019.  

 

(Unaudited)

(in millions)

Fourth Quarter 2019

Full Year 2019

Software Product Revenue

$83.5

to

$87.5

$349.0

to

$353.0

Non-GAAP Software Product Revenue

$85.8

 

$89.8

$358.0

 

$362.0

Total Revenue

$105.0

 

$109.0

$440.0

 

$444.0

Non-GAAP Total Revenue

$107.3

 

$111.3

$449.0

 

$453.0

Net (Loss)

$(5.4)

 

$(3.4)

$(11.4)

 

$(9.4)

Non-GAAP Net Income

$2.2

 

$4.2

$20.1

 

$22.1

Adjusted EBITDA

$7.3

 

$9.3

$34.0

 

$36.0

Modified Adjusted EBITDA

$9.5

 

$11.5

$43.0

 

$45.0

(All figures in millions)

 

Conference Call Information

What: Altair’s Third Quarter 2019 Financial Results Conference CallWhen:Thursday, November 7, 2019
Time:5:00 p.m. ETLive Call:(866) 754-5204, Domestic(636) 812-6621, International
Replay:(855) 859-2056, Conference ID 8382596, Domestic(404) 537-3406, Conference ID 8382596, InternationalWebcast: http://investor.altair.com  (live & replay)

***

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: Non-GAAP Software Product Revenue, Non-GAAP Total Revenue, Adjusted EBITDA, Modified Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Net Income Per Share and Free Cash Flow.

 

Altair believes that these non-GAAP measures of financial results provide useful information to management and investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company’s management uses these non-GAAP measures to compare the Company’s performance to that of prior periods for trend analysis, for purposes of determining executive and senior management incentive compensation and for budgeting and planning purposes. The Company also believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with other software companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP software product revenue and Non-GAAP total revenue include revenue not recognized under GAAP due to acquisition accounting adjustments associated with the accounting for deferred revenue in significant business combinations.

Adjusted EBITDA represents net income adjusted for income tax expense, interest expense, interest income and other, depreciation and amortization, stock-based compensation expense, restructuring charges, asset impairment charges and other special items as identified by management and described elsewhere in this press release.


Exhibit 99.1

Modified Adjusted EBITDA represents Adjusted EBITDA adjusted for revenue not recognized under GAAP due to acquisition accounting adjustments associated with the accounting for deferred revenue in significant business combinations.

Non-GAAP net income excludes stock-based compensation, amortization of intangible assets related to acquisitions, revenue not recognized under GAAP due to acquisition accounting and special items as identified by management and described elsewhere in this press release.

Non-GAAP diluted common shares includes total outstanding shares plus outstanding equity awards under the Altair equity award plans

Company management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. Altair urges investors to review the reconciliation of its non-GAAP financial measures to the comparable GAAP financial measures, which it includes in press releases announcing quarterly financial results, including this press release, and not to rely on any single financial measure to evaluate the Company’s business.

 

Reconciliation tables of the most comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this release.

 

About Altair
Altair is a global technology company that provides software and cloud solutions in the areas of product design and development, high-performance computing (HPC) and data intelligence. Altair enables organizations across broad industry segments to compete more effectively in a connected world while creating a more sustainable future. To learn more, please visit
www.altair.com.

 

Cautionary Language Concerning Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including but not limited to, our guidance for the fourth quarter and full year 2019, statements regarding other future periods and our reconciliations of projected non-GAAP financial measures.  These forward-looking statements are made as of the date of this release and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. Words such as “expect,” “anticipate,” “should,” “believe,” “hope,” “target,” “project,” “goals,” “estimate,” “potential,” “predict,” “may,” “will,” “might,” “could,” “intend,” variations of these terms or the negative of these terms and similar expressions are intended to identify these forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond Altair’s control. Altair’s actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including but not limited to, risks detailed in Altair’s quarterly and annual reports filed with the Securities and Exchange Commission as well as other documents that may be filed by the Company from time to time with the Securities and Exchange Commission. Past performance is not necessarily indicative of future results. The forward-looking statements included in this press release represent Altair’s views as of the date of this press release. The Company anticipates that subsequent events and developments will cause its views to change. Altair undertakes no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements should not be relied upon as representing Altair’s views as of any date subsequent to the date of this press release.

 

Investor and Media Relations

Dave Simon

Altair

248-614-2400 ext. 332

ir@altair.com



Exhibit 99.1

ALTAIR ENGINERING INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

 

September 30, 2019

 

 

December 31, 2018

 

(In thousands)

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

246,937

 

 

$

35,345

 

Accounts receivable, net

 

 

84,062

 

 

 

96,803

 

Income tax receivable

 

 

11,551

 

 

 

4,431

 

Prepaid expenses and other current assets

 

 

18,398

 

 

 

17,455

 

Total current assets

 

 

360,948

 

 

 

154,034

 

Property and equipment, net

 

 

33,720

 

 

 

30,153

 

Operating lease right of use assets

 

 

26,507

 

 

 

 

Goodwill

 

 

210,500

 

 

 

210,532

 

Other intangible assets, net

 

 

60,956

 

 

 

69,836

 

Deferred tax assets

 

 

5,870

 

 

 

5,354

 

Other long-term assets

 

 

18,199

 

 

 

17,288

 

TOTAL ASSETS

 

$

716,700

 

 

$

487,197

 

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

437

 

 

$

331

 

Accounts payable

 

 

8,286

 

 

 

8,357

 

Accrued compensation and benefits

 

 

28,839

 

 

 

31,740

 

Current portion of operating lease liabilities

 

 

8,891

 

 

 

 

Other accrued expenses and current liabilities

 

 

27,426

 

 

 

27,039

 

Deferred revenue

 

 

69,377

 

 

 

59,765

 

Total current liabilities

 

 

143,256

 

 

 

127,232

 

Long-term debt, net of current portion

 

 

175,624

 

 

 

31,417

 

Operating lease liabilities, net of current portion

 

 

18,831

 

 

 

 

Deferred revenue, non-current

 

 

7,666

 

 

 

6,754

 

Other long-term liabilities

 

 

25,630

 

 

 

25,756

 

TOTAL LIABILITIES

 

 

371,007

 

 

 

191,159

 

Commitments and contingencies

 

 

 

 

 

 

 

 

MEZZANINE EQUITY

 

 

2,352

 

 

 

2,352

 

STOCKHOLDERS’ EQUITY:

 

 

 

 

 

 

 

 

Preferred stock ($0.0001 par value), authorized 45,000 shares, none issued and outstanding

 

 

 

 

 

 

Common stock ($0.0001 par value)

 

 

 

 

 

 

 

 

Class A common stock, authorized 513,797 shares, issued and outstanding 40,354

   and 38,349 shares as of September 30, 2019 and December 31, 2018, respectively

 

 

4

 

 

 

4

 

Class B common stock, authorized 41,203 shares, issued and outstanding 31,391

   and 32,171 shares as of September 30, 2019 and December 31, 2018, respectively

 

 

3

 

 

 

3

 

Additional paid-in capital

 

 

436,197

 

 

 

379,832

 

Accumulated deficit

 

 

(80,903

)

 

 

(74,863

)

Accumulated other comprehensive loss

 

 

(11,960

)

 

 

(11,290

)

TOTAL STOCKHOLDERS’ EQUITY

 

 

343,341

 

 

 

293,686

 

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY

 

$

716,700

 

 

$

487,197

 



Exhibit 99.1

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands, except per share data)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License

 

$

46,853

 

 

$

40,880

 

 

$

180,127

 

 

$

154,515

 

Maintenance and other services

 

 

30,963

 

 

 

23,302

 

 

 

85,388

 

 

 

69,943

 

Total software

 

 

77,816

 

 

 

64,182

 

 

 

265,515

 

 

 

224,458

 

Software related services

 

 

7,956

 

 

 

8,692

 

 

 

25,635

 

 

 

26,872

 

Total software and related services

 

 

85,772

 

 

 

72,874

 

 

 

291,150

 

 

 

251,330

 

Client engineering services

 

 

12,803

 

 

 

12,155

 

 

 

37,265

 

 

 

36,652

 

Other

 

 

1,831

 

 

 

1,722

 

 

 

6,623

 

 

 

5,386

 

Total revenue

 

 

100,406

 

 

 

86,751

 

 

 

335,038

 

 

 

293,368

 

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License

 

 

4,371

 

 

 

2,736

 

 

 

13,146

 

 

 

10,534

 

Maintenance and other services

 

 

9,548

 

 

 

7,095

 

 

 

27,509

 

 

 

22,202

 

Total software *

 

 

13,919

 

 

 

9,831

 

 

 

40,655

 

 

 

32,736

 

Software related services

 

 

6,013

 

 

 

6,352

 

 

 

19,143

 

 

 

19,573

 

Total software and related services

 

 

19,932

 

 

 

16,183

 

 

 

59,798

 

 

 

52,309

 

Client engineering services

 

 

10,160

 

 

 

9,817

 

 

 

29,993

 

 

 

29,977

 

Other

 

 

1,649

 

 

 

1,204

 

 

 

5,858

 

 

 

3,416

 

Total cost of revenue

 

 

31,741

 

 

 

27,204

 

 

 

95,649

 

 

 

85,702

 

Gross profit

 

 

68,665

 

 

 

59,547

 

 

 

239,389

 

 

 

207,666

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development *

 

 

29,667

 

 

 

24,301

 

 

 

87,012

 

 

 

71,748

 

Sales and marketing *

 

 

25,790

 

 

 

19,243

 

 

 

78,462

 

 

 

57,849

 

General and administrative *

 

 

20,706

 

 

 

17,234

 

 

 

60,886

 

 

 

51,636

 

Amortization of intangible assets

 

 

3,545

 

 

 

1,739

 

 

 

10,673

 

 

 

5,665

 

Other operating income

 

 

(536

)

 

 

(4,850

)

 

 

(1,702

)

 

 

(7,433

)

Total operating expenses

 

 

79,172

 

 

 

57,667

 

 

 

235,331

 

 

 

179,465

 

Operating (loss) income

 

 

(10,507

)

 

 

1,880

 

 

 

4,058

 

 

 

28,201

 

Interest expense

 

 

2,726

 

 

 

31

 

 

 

3,586

 

 

 

92

 

Other income, net

 

 

(588

)

 

 

(970

)

 

 

(703

)

 

 

(2,046

)

(Loss) income before income taxes

 

 

(12,645

)

 

 

2,819

 

 

 

1,175

 

 

 

30,155

 

Income tax expense

 

 

3,294

 

 

 

1,885

 

 

 

7,215

 

 

 

5,617

 

Net (loss) income

 

$

(15,939

)

 

$

934

 

 

$

(6,040

)

 

$

24,538

 

Income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share attributable to common

  stockholders, basic

 

$

(0.22

)

 

$

0.01

 

 

$

(0.08

)

 

$

0.37

 

Net (loss) income per share attributable to common

  stockholders, diluted

 

$

(0.22

)

 

$

0.01

 

 

$

(0.08

)

 

$

0.33

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares used in computing

  net (loss) income per share, basic

 

 

71,770

 

 

 

70,001

 

 

 

71,313

 

 

 

66,429

 

Weighted average number of shares used in computing

  net (loss) income per share, diluted

 

 

71,770

 

 

 

76,709

 

 

 

71,313

 

 

 

74,182

 

_________________

*Amounts include stock-based compensation expense as follows (in thousands) (unaudited):

 


Exhibit 99.1

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Cost of revenue – software

 

$

384

 

 

$

8

 

 

$

727

 

 

$

24

 

Research and development

 

 

674

 

 

 

175

 

 

 

1,611

 

 

 

330

 

Sales and marketing

 

 

625

 

 

 

140

 

 

 

1,562

 

 

 

315

 

General and administrative

 

 

609

 

 

 

240

 

 

 

1,684

 

 

 

544

 

Total stock-based compensation expense

 

$

2,292

 

 

$

563

 

 

$

5,584

 

 

$

1,213

 

 



Exhibit 99.1

ALTAIR ENGINEERING INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

 

 

 

Nine Months Ended September 30,

 

(In thousands)

 

2019

 

 

2018

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(6,040

)

 

$

24,538

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

15,836

 

 

 

10,895

 

Provision for bad debt

 

 

472

 

 

 

455

 

Amortization of debt discount and issuance costs

 

 

3,044

 

 

 

18

 

Stock-based compensation expense

 

 

5,584

 

 

 

1,213

 

Gain on sale of assets held for sale and other

 

 

 

 

 

(4,544

)

Impairment of intangibles

 

 

 

 

 

608

 

Deferred income taxes

 

 

(741

)

 

 

706

 

Other, net

 

 

(16

)

 

 

(134

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

10,185

 

 

 

15,674

 

Prepaid expenses and other current assets

 

 

(8,718

)

 

 

(6,821

)

Other long-term assets

 

 

(1,443

)

 

 

44

 

Accounts payable

 

 

(420

)

 

 

796

 

Accrued compensation and benefits

 

 

(2,111

)

 

 

2,650

 

Other accrued expenses and current liabilities

 

 

2,110

 

 

 

(4,781

)

Operating lease right-of-use assets and liabilities, net

 

 

188

 

 

 

 

Deferred revenue

 

 

12,075

 

 

 

(895

)

Net cash provided by operating activities

 

 

30,005

 

 

 

40,422

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(8,120

)

 

 

(5,333

)

Payments for acquisition of developed technology

 

 

(473

)

 

 

(2,738

)

Payments for acquisition of businesses, net of cash acquired

 

 

(709

)

 

 

(15,950

)

Proceeds from the sale of assets held for sale and other

 

 

 

 

 

6,613

 

Other investing activities, net

 

 

16

 

 

 

 

Net cash used in investing activities

 

 

(9,286

)

 

 

(17,408

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from issuance of convertible senior notes, net of underwriters'

   discount and commissions

 

 

223,101

 

 

 

 

Payments on revolving commitment

 

 

(127,941

)

 

 

 

Borrowings under revolving commitment

 

 

96,991

 

 

 

 

Proceeds from the exercise of stock options

 

 

1,441

 

 

 

1,929

 

Payments for issuance costs of convertible senior notes

 

 

(1,233

)

 

 

 

Payments for follow-on public offering and initial public offering costs

 

 

 

 

 

(541

)

Proceeds from issuance of Class A common stock in follow-on public offering,

    net of underwriters' discounts and commissions

 

 

 

 

 

135,572

 

Other financing activities

 

 

(399

)

 

 

(446

)

Net cash provided by financing activities

 

 

191,960

 

 

 

136,514

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

(1,065

)

 

 

(1,354

)

Net increase in cash, cash equivalents and restricted cash

 

 

211,614

 

 

 

158,174

 

Cash, cash equivalents and restricted cash at beginning of year

 

 

35,685

 

 

 

39,578

 

Cash, cash equivalents and restricted cash at end of period

 

$

247,299

 

 

$

197,752

 

Supplemental disclosure of cash flow:

 

 

 

 

 

 

 

 

Interest paid

 

$

385

 

 

$

70

 

Income taxes paid

 

$

7,163

 

 

$

5,900

 

Supplemental disclosure of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Finance leases

 

$

588

 

 

$

995

 

Property and equipment in accounts payable, other current liabilities

    and other liabilities

 

$

1,827

 

 

$

228

 

Follow-on public offering costs in accounts payable

 

$

 

 

$

15

 

Promissory notes issued and deferred payment obligations for acquisitions

 

$

 

 

$

278

 

 


Exhibit 99.1

Financial Results

 

The following table provides a reconciliation of Non-GAAP net (loss) income and Non-GAAP net (loss) income per share - diluted to net (loss) income and net (loss) income per share – diluted, the most comparable GAAP financial measures:

 

 

 

(Unaudited)

 

  

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands, except per share amounts)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net (loss) income

 

$

(15,939

)

 

$

934

 

 

$

(6,040

)

 

$

24,538

 

Stock-based compensation expense

 

 

2,292

 

 

 

563

 

 

 

5,584

 

 

 

1,213

 

Amortization of intangible assets

 

 

3,545

 

 

 

1,739

 

 

 

10,673

 

 

 

5,665

 

Acquisition related deferred revenue (1)

 

 

2,250

 

 

 

 

 

 

6,750

 

 

 

 

Special adjustments (2)

 

 

1,027

 

 

 

(4,177

)

 

 

2,031

 

 

 

(4,400

)

Income tax effect of non-GAAP adjustments

 

 

(368

)

 

 

(459

)

 

 

(1,103

)

 

 

(658

)

Non-GAAP net (loss) income

 

$

(7,193

)

 

$

(1,400

)

 

$

17,895

 

 

$

26,358

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share - diluted

 

$

(0.22

)

 

$

0.01

 

 

$

(0.08

)

 

$

0.33

 

Non-GAAP net (loss) income per share - diluted

 

$

(0.09

)

 

$

(0.02

)

 

$

0.23

 

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted shares outstanding:

 

 

71,770

 

 

 

76,709

 

 

 

71,313

 

 

 

74,182

 

Non-GAAP diluted shares outstanding:

 

 

77,800

 

 

 

77,000

 

 

 

77,800

 

 

 

77,000

 

 

(1)

Represents revenue not recognized under GAAP due to acquisition accounting adjustments associated with the accounting for deferred revenue in significant business combinations.

(2)

Includes a) nonrecurring severance expenses of $0.4 million and nonrecurring acquisition related costs of $0.6 million, for both the three and nine months ended September 30, 2019, and b) an impairment charge for royalty contracts resulting in $1.0 million of expenses for the nine months ended September 30, 2019.

Includes a) a gain on the sale of a building of $4.4 million for the three and nine months ended September 30, 2018, b) an impairment charge for royalty contracts resulting in $0.2 million and $2.0 million for the three and nine months ended September 30, 2018, respectively and c) a non-recurring adjustment for a change in estimated legal expenses resulting in $2.0 million of income for the nine months ended September 30, 2018.

 

 

The following table provides a reconciliation of Adjusted EBITDA and Modified Adjusted EBITDA to net (loss) income, the most comparable GAAP financial measure:

 

 

 

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net (loss) income

 

$

(15,939

)

 

$

934

 

 

$

(6,040

)

 

$

24,538

 

Income tax expense

 

 

3,294

 

 

 

1,885

 

 

 

7,215

 

 

 

5,617

 

Stock-based compensation expense

 

 

2,292

 

 

 

563

 

 

 

5,584

 

 

 

1,213

 

Interest expense

 

 

2,726

 

 

 

31

 

 

 

3,586

 

 

 

92

 

Interest income and other (1)

 

 

(76

)

 

 

(4,384

)

 

 

633

 

 

 

(5,103

)

Depreciation and amortization

 

 

5,368

 

 

 

3,370

 

 

 

15,836

 

 

 

10,895

 

Adjusted EBITDA

 

 

(2,335

)

 

 

2,399

 

 

 

26,814

 

 

 

37,252

 

Acquisition related deferred revenue (2)

 

 

2,250

 

 

 

 

 

 

6,750

 

 

 

 

Modified Adjusted EBITDA

 

$

(85

)

 

$

2,399

 

 

$

33,564

 

 

$

37,252

 

 

 

(1)

Includes a) nonrecurring severance expenses of $0.4 million and nonrecurring acquisition related costs of $0.6 million, for both the three and nine months ended September 30, 2019, and b) impairment charges for royalty contracts resulting in $1.0 million of expense for the nine months ended September 30, 2019.  

Includes a) a gain on the sale of a building of $4.4 million for the three and nine months ended September 30, 2018, b) impairment charges for royalty contracts and trade names resulting in $0.8 million and $2.6 million of expense for the three and nine months ended September 30, 2018, respectively, and c) a non-recurring adjustment for a change in estimated legal expenses resulting in $2.0 million of income for the nine months ended September 30, 2018.

(2)

Represents revenue not recognized under GAAP due to acquisition accounting adjustments associated with the accounting for deferred revenue in significant business combinations.


Exhibit 99.1

The following table provides a reconciliation of Non-GAAP total revenue to total revenue, the most comparable GAAP financial measure:

 

 

 

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Total revenue

 

$

100,406

 

 

$

86,751

 

 

$

335,038

 

 

$

293,368

 

Acquisition related deferred revenue (1)

 

 

2,250

 

 

 

 

 

 

6,750

 

 

 

 

Non-GAAP total revenue

 

$

102,656

 

 

$

86,751

 

 

$

341,788

 

 

$

293,368

 

(1)

Adjustment for revenue not recognized under GAAP due to acquisition accounting adjustments associated with the accounting for deferred revenue in significant business combinations.

 

The following table provides a reconciliation of Non-GAAP total software product revenue to total software product revenue, the most comparable GAAP financial measure:

 

 

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Total software product revenue

 

$

77,816

 

 

$

64,182

 

 

$

265,515

 

 

$

224,458

 

Acquisition related deferred revenue(1)

 

 

2,250

 

 

 

 

 

 

6,750

 

 

 

 

Non-GAAP total software product revenue

 

$

80,066

 

 

$

64,182

 

 

$

272,265

 

 

$

224,458

 

(1)

Adjustment for revenue not recognized under GAAP due to acquisition accounting adjustments associated with the accounting for deferred revenue in significant business combinations.

The following table provides a recompilation of Free Cash Flow to net cash provided by operating activities, the most comparable GAAP financial measure:

 

 

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands)

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net cash (used in) provided by operating activities

 

$

(1,863

)

 

$

3,109

 

 

$

30,005

 

 

$

40,422

 

Capital expenditures

 

 

(1,453

)

 

 

(2,203

)

 

 

(8,120

)

 

 

(5,333

)

Free cash flow

 

$

(3,316

)

 

$

906

 

 

$

21,885

 

 

$

35,089

 

Effective January 1, 2018, we adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASC 606). The following table sets forth selected quarterly information under ASC 606 for 2018:

 

 

(Unaudited)

 

 

 

Three months ended

 

 

 

ASC 606

 

(in thousands)

 

March 31,

2018

 

 

June 30,

2018

 

 

September 30,

2018

 

 

December 31,

2018

 

Software product revenue

 

$

89,670

 

 

$

70,606

 

 

$

64,182

 

 

$

79,903

 

Total revenue

 

 

113,257

 

 

 

93,360

 

 

 

86,751

 

 

 

103,011

 

Net income (loss)

 

 

24,684

 

 

 

(1,080

)

 

 

934

 

 

 

(9,003

)

Adjusted EBITDA

 

 

29,550

 

 

 

5,303

 

 

 

2,399