Advent Software Reports Second Quarter 2014 Results SAN

SAN FRANCISCO, CA--(Marketwired - Jul 28, 2014) - Advent Software, Inc. ( NASDAQ : ADVS ), a leading provider of software and services to the global investment management industry, announced today its financial results for the second quarter ended June 30, 2014.

"We are pleased to report that Advent had an excellent second quarter with record revenues, robust profitability, and growing operating cash flow," said Pete Hess, Chief Executive Officer of Advent. "Increasing demand for Advent's solutions, including Advent Direct® Investor Management, and continued client loyalty are evidence of our strong competitive position."

SECOND QUARTER 2014 RESULTS

GAAP Results for Continuing Operations The Company reported quarterly revenue of $100.4 million for the second quarter of 2014, compared to $96.1 million in the second quarter of 2013, a 4% increase.

Operating income for the second quarter of 2014 was $21.8 million, or 21.7% of revenue, compared to a loss of $5.8 million for the second quarter of 2013. Advent's results for the second quarter of 2013 included costs associated with its recapitalization transaction. These costs, on a pre-tax basis, were composed of $6.7 million of third party costs which were not included in capitalized debt issue costs and $21.9 million of stock-based compensation expense associated with the modification of equity awards.

Net income for the second quarter of 2014 was $12.7 million, compared to a loss of $4.2 million in the second quarter of 2013. On a fully diluted basis, earnings per share in the second quarter of 2014 were $0.24 compared to a loss of $0.08 in the second quarter of 2013.

Operating cash flow in the second quarter of 2014 was $22.4 million, compared with $21.9 million in the second quarter of 2013.

Cash and cash equivalents totaled $41 million as of June 30, 2014, compared to $45 million as of March 31, 2014. Total outstanding debt as of June 30, 2014 was $280 million compared to $295 million as of March 31, 2014.

Deferred revenue as of June 30, 2014 was $183.1 million, compared to $187.8 million as of March 31, 2014.

The Company repurchased approximately 426,000 shares of its common stock in the second quarter of 2014 for a total cash outlay of $12.4 million and at an average price of $29.11 per share.

Non-GAAP Results for Continuing Operations Non-GAAP operating income for the second quarter of 2014 was $33.2 million, or 33.1% of revenue, a 7% increase compared to $31.0 million, or 32.3% of revenue, in the second quarter of 2013.

On a fully diluted basis, non-GAAP earnings per share were $0.38 in the second quarter of 2014 and represent a 4% increase from non-GAAP diluted net income per share of $0.37 in the second quarter of 2013.

The reconciliation between GAAP and non-GAAP financial measures is provided at the end of this press release.

HIGHLIGHTS

• Advent's Black Diamond Platform Surpasses 500-Client Milestone. Advent's Black Diamond platform has surpassed 540 clients and has exceeded $245 billion in assets on its portfolio management, reporting, and rebalancing platform. The client base has increased by more than 125 percent and assets by more than 240 percent since its acquisition by Advent in June 2011.
• Award-Winning Solutions & Company: Advent's solutions continued to receive industry awards and win honors around the world during the second quarter. Advent was awarded "Best Fund Accounting and Reporting Systems Firm" by Hedgeweek , as well as "Best Client Reporting Solution" by FTF News. In Europe, Advent was named "Best Portfolio Management Solution" at Wealth Briefing European Awards 2014 and "Best Technology - Fund Accounting" at the HFM Week European Hedge Fund Service Awards.
• Continued Client Success: Advent had a strong second quarter, with a number of existing clients expanding their relationship with Advent, and many new noteworthy clients around the world, including Beta Capital Management, Carroll Financial Associates, Fiera Capital Corporation, Finix Services, Merced Capital L.P., Busey Wealth Management, Mesirow Financial Administrative Corp., William E. Hamm and Associates, Neon Capital Management, and the Georgia Division of Investment Services.
• Quarterly Dividend: Advent's Board of Directors declared its first quarterly cash dividend to its shareholders during the second quarter of 2014. The quarterly cash dividend payment of $0.13 per common share was paid on July 15, 2014 to shareholders of record on June 30, 2014.

FINANCIAL GUIDANCE Advent updates the following financial guidance for the third quarter and fiscal year 2014:

Guidance		Q3 2014		FY 2014
Total Revenue ($M)		$99 - $102		$395 - $403
GAAP Operating Margin		n/a		20.0% - 20.5%
Stock Compensation Expense (% of revenue)		n/a		8.5%
Amortization of Intangibles (% of revenue)		n/a		2.0%
Restructuring (% of revenue)		n/a		0.5%
Non-GAAP Operating Margin		n/a		31.0% - 31.5%
Operating Cash Flow ($M)		n/a		$105 - $115
Capital Expenditures ($M)		n/a		$8 - $11
Effective Tax Rate (GAAP)		n/a		35% - 40%
Effective Tax Rate (non-GAAP)		n/a		35%

INVESTOR CALL Advent Software, Inc. will host its Q2 2014 quarterly earnings conference call at 5:00 p.m. Eastern time today. The Q2 2014 earnings presentation and trended disclosures file, which include highlights and detailed financial information, are currently available at http://investor.advent.com . To participate via phone, please dial 877-474-9504 and request conference ID # 25698158. Telephone replay will be available through midnight August 4, 2014. The replay number for domestic callers is 888-286-8010 , and for international callers is 617-801-6888 , with the conference ID of # 31161812. The conference call will also be webcast live and then archived on http://investor.advent.com .

ABOUT ADVENT Over the last 30 years of industry change, our core mission to help our clients focus on their unique strategies and deliver exceptional investor service has never wavered. With unparalleled precision and ahead of the curve solutions, we've helped over 4,300 firms in more than 50 countries -- from established global institutions to small start-up practices -- to grow their business and thrive. Advent technology helps firms minimize risk, work together seamlessly, and discover new opportunities in a constantly evolving world. Together with our clients, we are shaping the future of investment management. For more information on Advent products visit http://www.advent.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 in the United States of America (GAAP), please see the accompanying tables entitled "Reconciliation of Selected Continuing Operations' GAAP Measures to Non-GAAP Measures."

FORWARD-LOOKING STATEMENTS The financial projections under Financial Guidance and any other forward-looking statements included in this presentation reflect management's best judgment based on factors currently known and involve risks and uncertainties; our actual results may differ materially from those discussed here. These risks and uncertainties include: potential fluctuations in new contract bookings, renewal rates, operating results and future growth rates; continued market acceptance of our products; the successful development, release and market acceptance of new products and product enhancements; uncertainties and fluctuations in the financial markets; the Company's ability to declare future dividends; the Company's ability to satisfy contractual performance requirements and other risks detailed from time to time in our SEC reports including, but not limited to, our quarterly reports on Form 10-Q and our 2013 Annual Report on Form 10-K. The Company disclaims any intention or obligation to publicly update or revise any forward-looking statements including any guidance, whether as a result of events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Advent, the Advent logo, Advent Software, and Advent Direct are registered trademarks of Advent Software, Inc. Any other company names or marks mentioned herein are those of their respective owners.

ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(GAAP, Unaudited)
					June 30				December 31
					2014				2013
ASSETS
Current assets:
	Cash and cash equivalents				$	41,332			$	33,828
	Accounts receivable, net					58,188				58,717
	Deferred taxes, current					24,902				24,898
	Prepaid expenses and other					26,507				30,114
	Current assets of discontinued operation					-				100
			Total current assets			150,929				147,657
Property and equipment, net						31,585				31,698
Goodwill						208,471				207,818
Other intangibles, net						23,295				27,392
Deferred taxes, long-term						21,845				23,020
Other assets						14,763				17,372
Noncurrent assets of discontinued operation						1,337				1,337
		Total assets			$	452,225			$	456,294
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
	Accounts payable				$	9,977			$	5,348
	Dividends payable					6,693				-
	Accrued liabilities					37,671				41,625
	Deferred revenues					175,288				186,107
	Current portion of long-term debt					20,000				20,000
	Current liabilities of discontinued operation					618				600
		Total current liabilities				250,247				253,680
Deferred revenues, long-term						7,854				7,809
Long-term income taxes payable						7,667				7,667
Long-term debt						260,000				285,000
Other long-term liabilities						9,938				11,171
Noncurrent liabilities of discontinued operation						2,478				2,782
		Total liabilities				538,184				568,109
Stockholders' deficit:
	Common stock					514				513
	Additional paid-in capital					55,828				42,533
	Accumulated deficit					(154,298	)			(165,870	)
	Accumulated other comprehensive income					11,997				11,009
		Total stockholders' deficit				(85,959	)			(111,815	)
		Total liabilities and stockholders' deficit			$	452,225			$	456,294

ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(GAAP, Unaudited)
				Three Months Ended June 30									Six Months Ended June 30
				2014				2013					2014				2013
Net revenues:
Recurring revenues				$	92,534			$	88,263			$	181,664			$	172,746
Non-recurring revenues					7,836				7,860				15,510				15,867
	Total net revenues				100,370				96,123				197,174				188,613
Cost of revenues (1) :
Recurring revenues					20,589				17,979				39,216				34,391
Non-recurring revenues					7,514				10,019				15,569				19,587
Amortization of developed technology					1,688				2,398				3,488				4,897
	Total cost of revenues				29,791				30,396				58,273				58,875
	Gross margin				70,579				65,727				138,901				129,738
Operating expenses (1) :
Sales and marketing					18,299				23,217				38,029				40,421
Product development					17,204				17,923				34,843				34,885
General and administrative					10,713				22,641				21,270				33,001
Amortization of other intangibles					870				953				1,779				1,910
Recapitalization costs					-				6,041				-				6,041
Restructuring charges					1,740				801				1,914				3,116
	Total operating expenses				48,826				71,576				97,835				119,374
Income (loss) from continuing operations					21,753				(5,849	)			41,066				10,364
Interest and other income (expense), net					(1,948	)			(1,330	)			(4,173	)			(1,633	)
Income (loss) from continuing operations before income taxes					19,805				(7,179	)			36,893				8,731
Provision (benefit) for income taxes					7,150				(3,024	)			13,331				829
	Net income (loss) from continuing operations			$	12,655			$	(4,155	)		$	23,562			$	7,902
Discontinued operation:
	Net (loss) income from discontinued operation (net of applicable taxes of $(10), $76, $(24) and $61, respectively)				(16	)			110				(37	)			88
Net income (loss)				$	12,639			$	(4,045	)		$	23,525			$	7,990
Basic net income (loss) per share (2) :
	Continuing operations			$	0.25			$	(0.08	)		$	0.46			$	0.15
	Discontinued operation				(0.00	)			0.00				(0.00	)			0.00
		Total operations		$	0.25			$	(0.08	)		$	$ 0.46			$	0.16
Diluted net income (loss) per share (2) :
	Continuing operations			$	0.24			$	(0.08	)		$	0.44			$	0.15
	Discontinued operation				(0.00	)			0.00				(0.00	)			0.00
		Total operations		$	0.24			$	(0.08	)		$	$ 0.44			$	0.15
Weighted average shares used to compute net income (loss) per share:
	Basic				51,456				51,639				51,314				51,101
	Diluted				53,540				51,639				53,486				52,243
Cash dividends declared per common share				$	0.13				-			$	0.13				-
(1) Includes stock-based employee compensation expense as follows:
	Cost of recurring revenues			$	834			$	1,306			$	1,676			$	1,794
	Cost of non-recurring revenues				354				1,730				729				2,112
		Total cost of revenues			1,188				3,036				2,405				3,906
	Sales and marketing				2,661				6,523				5,296				8,046
	Product development				1,923				3,532				3,848				4,858
	General and administrative				1,912				14,098				3,763				15,396
		Total operating expenses			6,496				24,153				12,907				28,300
	Total stock-based employee compensation expense			$	7,684			$	27,189			$	15,312			$	32,206
(2) Net income (loss) per share is based on actual calculated values and totals may not sum due to rounding.

ADVENT SOFTWARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
					Six Months Ended June 30
					2014				2013
Cash flows from operating activities:
	Net income				$	23,525			$	7,990
	Adjustment to net income for discontinued operation net loss (income)					37				(88	)
	Net income from continuing operations					23,562				7,902
	Adjustments to reconcile net income to net cash providedby operating activities from continuing operations:
		Stock-based compensation				15,312				32,206
		Excess tax benefit from stock-based compensation				(6,841	)			(2,783	)
		Depreciation and amortization				10,814				12,673
		Amortization of debt issuance costs				713				239
		(Reduction of) provision for doubtful accounts				(6	)			411
		Reduction of sales reserves				(555	)			(150	)
		Deferred income taxes				7,763				1,791
		Other				182				(148	)
			Effect of statement of operations adjustments			27,382				44,239
		Changes in operating assets and liabilities:
		Accounts receivable				535				5,282
		Prepaid and other assets				5,661				(4,643	)
		Accounts payable				3,675				3,582
		Accrued liabilities				(7,282	)			(3,472	)
		Deferred revenues				(10,219	)			(8,634	)
		Income taxes payable				-				(5,190	)
			Effect of changes in operating assets and liabilities			(7,630	)			(13,075	)
Net cash provided by operating activities from continuing operations						43,314				39,066
Cash flows from investing activities:
	Purchases of property and equipment					(4,370	)			(1,611	)
	Capitalized software development costs					(963	)			(1,916	)
	Change in restricted cash					(173	)			-
	Purchases of marketable securities					-				(57,863	)
	Sales and maturities of marketable securities					-				213,444
Net cash (used in) provided by investing activities from continuing operations						(5,506	)			152,054
Cash flows from financing activities:
	Proceeds from common stock issued from exercises of stock options					2,141				16,212
	Proceeds from common stock issued under the employee stock purchase plan					3,493				3,211
	Excess tax benefits from stock-based compensation					6,841				2,783
	Withholding taxes related to equity award net share settlement					(5,127	)			(6,509	)
	Proceeds from debt					-				225,000
	Repayment of debt					(25,000	)			(95,000	)
	Repurchase of common stock					(12,411	)			-
	Debit issuance costs					-				(5,725	)
Net cash (used in) provided by financing activities from continuing operations						(30,063	)			139,972
Net cash transferred to discontinued operation						(223	)			(208	)
Effect of exchange rate changes on cash and cash equivalents						(18	)			(358	)
Net change in cash and cash equivalents from continuing operations						7,504				330,526
Cash and cash equivalents of continuing operations at beginning of period						33,828				58,217
Cash and cash equivalents of continuing operations at end of period					$	41,332			$	388,743
					Six Months Ended June 30
						2014				2013
Supplemental disclosure of cash flow information:
Noncash investing activities:
	Capital expenditures included in accounts payable				$	1,086			$	-
Cash flows from discontinued operation of MicroEdge, Inc.:
	Net cash used in operating activities				$	(223	)		$	(208	)
	Net cash transferred from continuing operations					223				208

ADVENT SOFTWARE, INC.
RECONCILIATION OF SELECTED CONTINUING OPERATIONS' GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except per share data)
(Unaudited)
To supplement our condensed consolidated financial statements presented in accordance with generally accepted accounting principles in the United States of America (or GAAP), Advent uses non-GAAP measures of continuing operations' gross margin, operating income, net income and net income per share, which are adjusted to exclude certain costs, expenses and income we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Advent's underlying operational results and trends and our marketplace performance. In addition, these non-GAAP results are among the information management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with GAAP.
			Three Months Ended June 30
			2014							2013
			Amount				% of Net Revenues			Amount				% of Net Revenues
GAAP gross margin			$	70,579			70.3	%		$	65,727			68.4	%
	Amortization of acquired intangibles			1,192							1,883
	Stock-based compensation			1,188							3,036
Non-GAAP gross margin			$	72,959			72.7	%		$	70,646			73.5	%
GAAP operating income (loss)			$	21,753			21.7	%		$	(5,849	)		-6.1	%
	Amortization of acquired intangibles			2,063							2,836
	Stock-based compensation			7,684							27,189
	Restructuring charges			1,740							801
	Recapitalization costs			-							6,041
Non-GAAP operating income			$	33,240			33.1	%		$	31,018			32.3	%
GAAP net income (loss)			$	12,655						$	(4,155	)
	Amortization of acquired intangibles			2,063							2,836
	Stock-based compensation			7,684							27,189
	Restructuring charges			1,740							801
	Recapitalization costs			-							6,692
	Income tax adjustment (1)			(3,802	)						(13,642	)
Non-GAAP net income			$	20,340						$	19,721
GAAP net income (loss)			$	12,655						$	(4,155	)
	Net interest			1,875							1,351
	Provision (benefit) for income taxes			7,150							(3,024	)
	Depreciation expense			2,781							2,920
	Amortization expense			2,558							3,352
	Stock-based compensation			7,684							27,189
Adjusted EBITDA			$	34,703						$	27,633
Diluted net income (loss) per share
	GAAP		$	0.24						$	(0.08	)
	Non-GAAP		$	0.38						$	0.37
Shares used to compute GAAP diluted net income (loss) per share				53,540							51,639
Shares used to compute Non-GAAP diluted net income per share				53,540							53,772

(1)		The estimated non-GAAP effective tax rate was 35% for the three months ended June 30, 2014 and 2013, respectively, and has
		been used to adjust the provision for income taxes for non-GAAP net income and non-GAAP diluted net income per share purposes.

ADVENT SOFTWARE, INC.
RECONCILIATION OF PROJECTED CONTINUING OPERATIONS' GAAP OPERATING INCOME %
TO NON-GAAP OPERATING INCOME %
(Preliminary and unaudited)
Advent provides projections for the non-GAAP measure of its continuing operations' operating income percentage. This non-GAAP measure excludes certain costs and expenses which we believe is appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. Adjustments to our projected continuing operations' GAAP results are made with the intent of providing management and investors a more complete understanding of Advent's underlying operational results and trends and our marketplace performance. In addition, these adjusted non-GAAP projections are among the information management uses as a basis for planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with generally accepted accounting principles in the United States of America.
			Twelve Months Ending December 31, 2014
			Continuing Operations
			Operating Income %
Projected GAAP			20.0	%		to			20.5	%
	Projected stock-based compensation adjustment					8.5	%
	Projected amortization of acquired developed technology and other acquired intangible asset adjustment					2.0	%
	Projected restructuring charge adjustment					0.5	%
Projected non-GAAP			31.0	%		to			31.5	%