Avid Discloses Financial, Business Highlights of Quarter 4/Full Year Report
Avid announced its fourth quarter and full-year 2018 financial results, provided guidance for the first quarter of 2019 and reaffirmed full-year 2019 guidance.
- Revenue was $112.7 million, an increase of 5% year-over-year and 8% sequentially. Revenue excluding non-cash revenue was $112.4 million, an increase of 7% year-over-year and 10% sequentially.
- Gross Margin was 59.0%, up 450 basis points year-over-year. Non-GAAP Gross Margin was 60.8%, up 480 basis points year-over-year.
- Operating Expenses were $54.4 million, an increase of 1% year-over-year and 2% sequentially largely driven by a $5.2M legal settlement recognized as a credit in Q4 2017 offset by savings from operational efficiency initiatives. Excluding the non-recurring settlement, operating expenses declined by $4.4 million year-over year.
- Operating Income was $12.1 million, an improvement of $7.3 million year-over-year and $5.0 million sequentially.
- Adjusted EBITDA was $21.3 million, an increase of 42% year-over-year and 46% sequentially. Adjusted EBITDA Margin was 18.9%, up 490 basis points year-over-year and sequentially.
- GAAP net income per common share was $0.14, up from net loss per common share of ($0.02) in Q4 2017.
- Net cash provided by operating activities was $20.1 million.
- Free Cash Flow was $17.7 million.
- Software revenue from subscriptions increased 77% year-over-year, surpassing $10 million in the quarter.
- Revenue through the Company’s e-commerce activities was up 50% year-over-year.
2018 Financial and Business Highlights
- Revenue was $413.3 million, a decrease of 1% year-over-year. Revenue, excluding non-cash revenue, was $407.1 million, an increase of 5% year-over-year.
- Gross Margin was 57.9%, up 10 basis points year-over-year. Non-GAAP Gross Margin was 59.8%, up 10 basis points year-over-year.
- Operating Expenses were $225.5 million, a decrease of 5% year-over-year largely driven by savings from operational efficiency initiatives.
- Operating Income was $13.7 million, an increase of 161%, or $8.4 million, year-over-year.
- Adjusted EBITDA was $47.5 million, a decrease of 2% year-over-year. Adjusted EBITDA Margin was 11.5%, flat with 2017.
- GAAP net loss per common share of ($0.26), up from GAAP net loss per common share of ($0.33) in 2017.
- Net cash provided by operating activities was $15.8 million.
- Free Cash Flow was $5.9 million, an increase of $4.8 million from the prior year
- Software revenue from subscriptions increased 78% year-over-year, with approximately 125,000 cloud-enabled software subscriptions at the end of 2018.
- Revenue through the Company’s e-commerce activities was up 52% year-over-year, surpassing $50 million for the year.
- Recurring Revenue was 56% of the Company’s revenue in 2018 up from 49% in 2017.
- Annual Contract Value (ACV) was $248 million at the end of 2018 up from $216 million at the end of 2017, reflecting continuing growth in Avid’s high-margin subscription revenue plus maintenance revenues and revenues under long-term agreements.
“Our return to revenue growth and the improvement in our key financial metrics, including Free Cash Flow and Adjusted EBITDA, demonstrate an improving business profile for our Company,” says Jeff Rosica, Chief Executive Officer and President of Avid. “Additionally, the management team is focused on continuing to build upon a scalable recurring revenue model as evidenced by our double-digit growth in subscriptions and e-commerce revenue. We intend to continue to drive R&D investments in key product areas in 2019 which are expected to set the foundation for future growth for the Company.”
“We ended 2018 with strong momentum evidenced by our improving revenue streams, gross margin and cash flow. With our strong revenue backlog and the savings from our internal efficiency programs we have visibility to continued improvements in Free Cash Flow and Adjusted EBITDA during 2019,” comments Ken Gayron, Executive Vice President and Chief Financial Officer of Avid.
Explanations regarding our use of non-GAAP financial measures and operational metrics and related definitions, and reconciliations of our GAAP and non-GAAP measures, are provided in the sections below entitled “Non-GAAP Financial Measures and Operational Metrics” and “Reconciliations of GAAP financial measures to Non-GAAP financial measures.”
First Quarter and Full Year 2019 Guidance
For the first quarter of 2019, Avid is providing Revenue and Adjusted EBITDA guidance. Avid is also reaffirming its guidance for Revenue, Adjusted EBITDA and Free Cash Flow for full-year 2019:
Q1 2019 / Full Year 2019 (in $ millions)
Revenue: $96 – $104 / $420 – $430
Adjusted EBITDA: $7 – $12 / $60 – $65
Free Cash Flow: $12 – $17