BroadSoft Reports Second Quarter 2012 Financial ResultsGAITHERSBURG, MD -- (Marketwire - August 06, 2012) - BroadSoft, Inc. (NASDAQ: BSFT), the leading global provider of Internet protocol-based, or IP-based, communications services to the telecommunications industry, today announced financial results for the quarter ended June 30, 2012.
Financial Highlights for the Second Quarter of 2012
- Total revenue increased 26% year-over-year to $40.5 million
- GAAP gross profit equaled 79% of total revenue; non-GAAP gross profit equaled 82% of total revenue
- GAAP income from operations totaled $5.6 million or 14% of revenue; non-GAAP income from operations totaled $9.9 million or 24% of revenue
- GAAP diluted EPS equaled $0.08 per common share; non-GAAP diluted EPS equaled $0.33 per common share
Results for the three months ended June 30, 2012
Total revenue rose to $40.5 million in the second quarter of 2012, an increase of 26% compared to $32.2 million in the second quarter of 2011.
Net income for the second quarter of 2012 was $2.4 million, or $0.08 per diluted common share, compared to net income of $15.8 million, or $0.57 per diluted common share, in the second quarter of 2011. Second quarter 2011 results included an income tax benefit of $9.9 million, or $0.36 per diluted common share, resulting from the release of a tax valuation allowance relating to net deferred tax assets.
On a non-GAAP basis, net income in the second quarter of 2012 was $9.4 million, or $0.33 per diluted common share, compared to non-GAAP net income of $7.6 million, or $0.27 per diluted common share, in the second quarter of 2011. A reconciliation of non-GAAP and GAAP results is included in the financial tables below.
Results for the six months ended June 30, 2012
Total revenue was $78.9 million for the first six months of 2012, compared to $61.8 million for the first six months of 2011, reflecting year-over-year growth of 28%.
Net income for the first six months of 2012 was $4.1 million, or $0.14 per diluted common share, compared to net income of $19.5 million, or $0.70 per diluted common share, for the first six months of 2011. Results for the six months ended June 30, 2011 included an income tax benefit of $9.9 million, or $0.36 per diluted common share, resulting from the release of a tax valuation allowance relating to net deferred tax assets.
On a non-GAAP basis, net income for the first six months of 2012 was $17.5 million or $0.62 per diluted common share, compared to non-GAAP net income of $13.0 million, or $0.47 per diluted common share, in the first six months of 2011. A reconciliation of non-GAAP and GAAP results is included in the financial tables below.
Management Commentary
"BroadSoft had a strong second quarter and first half of 2012. We are executing well and demand for our software and services continues to grow," said Michael Tessler, president and chief executive officer, BroadSoft. "To continue to deliver on our commitment to drive innovative solutions for our customers, today we announced our acquisition of the assets of Adaption Technologies, which we believe will help us enhance our BroadCloud Software-as-a-Service (SaaS) delivery platform. BroadCloud will now include BroadWorks' award winning features and functionality, helping speed time-to-market of our service provider customers' Unified Communications offerings."
"We delivered a strong second quarter, marked by a 26% increase in revenue compared to the year ago period," said Jim Tholen, chief financial officer, BroadSoft. "Both our non-GAAP operating income and net income improved relative to last year's second quarter. We also generated a very healthy $11.7 million in cash flow from operations and ended the quarter with cash, cash equivalents and investments totaling $194 million."
Guidance
For the third quarter of 2012, BroadSoft anticipates revenue of $40 to $42 million inclusive of approximately $0.5 million in revenue from a partial-quarter contribution from the Adaption acquisition. The Company also expects to achieve earnings on a non-GAAP basis of $0.27 to $0.33 per diluted common share which includes expected dilution from the Adaption acquisition of approximately $0.02 per share.
For the full year 2012, BroadSoft expects revenue of $162 to $167 million which includes approximately $1.3 million in contribution from the Adaption acquisition. The Company anticipates full year 2012 earnings on a non-GAAP basis of $1.30 to $1.40 per diluted common share, which includes expected dilution of approximately $0.04 per share for the Adaption acquisition.
Conference Call
BroadSoft will discuss its second quarter results and business outlook today via teleconference at 5:00 p.m. Eastern Time. To participate in the teleconference, callers can dial the toll free number 1-877-312-5517 (U.S. callers only) or 1-760-666-3772 (from outside the U.S.). The conference call can also be heard live via audio webcast at http://investors.broadsoft.com/events.cfm. To help ensure the conference begins on time, please dial in or connect via the web five minutes prior to the scheduled start time.
For those unable to participate in the live call, an audio replay will be available between 8:00 p.m. Eastern Time August 6, 2012 and 11:59 p.m. Eastern Time August 13, 2012 by calling 1-855-859-2056 or 1-404-537-3406, with Conference ID 10547785. A recording of the call will be available two hours following the conclusion of the call at http://investors.broadsoft.com until November 5, 2012.
BroadSoft has provided in this release, and will provide on this afternoon's teleconference, financial information that has not been prepared in accordance with generally accepted accounting principles, or GAAP. BroadSoft uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating BroadSoft's ongoing operational performance. BroadSoft's management regularly uses these non-GAAP financial measures to understand and manage its business and believes these non-GAAP financial measures provide meaningful supplemental information regarding the Company's performance by excluding certain non-cash expenses, and may include additional adjustments for items that are infrequent in nature. BroadSoft believes 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 its financial results with other companies in BroadSoft's industry, many of which present similar non-GAAP financial measures to investors. A reconciliation of the non-GAAP financial measures included in this release and to be discussed on this afternoon's teleconference to the most directly comparable GAAP financial measures is set forth below.
Non-GAAP financial measures:
Non-GAAP net income and net income per share. BroadSoft defines non-GAAP net income as net income plus stock-based compensation expense, amortization expense for acquired intangible assets, non-cash interest expense on the Company's convertible notes, and non-cash tax expense included in the GAAP tax provision. BroadSoft defines non-GAAP income per share as non-GAAP net income divided by the weighted average shares outstanding. BroadSoft considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of certain non-cash expenses so management and investors can compare BroadSoft's core business operating results over multiple periods.
Non-GAAP gross margin, license gross margin and maintenance and services gross margin. BroadSoft defines non-GAAP gross margin as gross margin plus stock-based compensation expense and amortization expense for acquired intangible assets. BroadSoft considers non-GAAP gross margin to be a useful metric for management and our investors because it excludes the effect of certain non-cash expenses so management and its investors can compare BroadSoft's sales margins over multiple periods. Where BroadSoft provides further breakdown of non-GAAP gross margin between license and maintenance services, the Company adds back the stock-based compensation expense and amortization expense, as applicable, to the related gross margin.
Non-GAAP income from operations. BroadSoft defines non-GAAP income from operations as income from operations plus stock-based compensation expense and amortization expense for acquired intangible assets. BroadSoft considers non-GAAP income from operations to be a useful metric for management and investors because it excludes the effect of certain non-cash expenses so management and investors can compare BroadSoft's core business operating results over multiple periods. Where BroadSoft provides further breakdown of non-GAAP operating expenses for sales and marketing, research and development and general and administrative, the Company deducts stock-based compensation expense included in the applicable expense item.
With respect to our expectations under "Guidance" above, reconciliation of non-GAAP earnings per share guidance to the closest corresponding GAAP measure is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures; in particular, the measures and effects of non-cash income taxes, which are extremely difficult to project as a result of our tax status in a number of foreign jurisdictions, and stock-based compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future GAAP financial results.
The presentation of non-GAAP net income, non-GAAP net income per share, non-GAAP gross margin, non-GAAP income from operations and other non-GAAP financial measures in this release and on this afternoon's teleconference is not meant to be a substitute for "net income," "net income per share," "gross margin," "income from operations" or other financial measures presented in accordance with GAAP, but rather should be evaluated in conjunction with such data. BroadSoft's definition of "non-GAAP net income," "non-GAAP net income per share," "non-GAAP gross margin," "non-GAAP income from operations" and other non-GAAP financial measures may differ from similarly titled non-GAAP measures used by other companies and may differ from period to period. In reporting non-GAAP measures in the future, management may make other adjustments for expenses and gains it does not consider reflective of core operating performance in a particular period and may modify "non-GAAP net income," "non-GAAP net income per share," "non-GAAP gross margin," "non-GAAP income from operations" and such other non-GAAP measures by excluding these expenses and gains.
Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by their use of terms and phrases such as "anticipate," "enable," "expect," "will," "believe," "continue" and other similar terms and phrases, and such forward-looking statements include, but are not limited to, the statements regarding the Company's future financial performance set forth under the heading "Guidance." The outcome of the events described in these forward-looking statements is subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to: the Company's dependence on the success of BroadWorks® and on its service provider customers to sell services using its applications; claims that the Company infringes the intellectual property rights of others; the Company's dependence in large part on service providers' continued deployment of, and investment in, their IP-based networks; the Company's ability to integrate and achieve the expected benefits from its recent acquisitions, including Adaption Technologies; and the Company's ability to expand its product offerings, as well as those factors contained in the "Risk Factors" sections of the Company's Form 10-Q for the quarter ended June 30, 2012 filed with the Securities and Exchange Commission, or SEC, today and the Company's Form 10-K for the year ended December 31, 2011 filed with the SEC on February 29, 2012, and in the Company's other filings with the SEC. All information in this release is as of August 6, 2012. Except as required by law, the Company undertakes no obligation to update publicly any forward-looking statement made herein for any reason to conform the statement to actual results or changes in the Company's expectations.
About BroadSoft
BroadSoft is the leading provider of software and services that enable mobile, fixed-line and cable service providers to offer Unified Communications over their Internet Protocol networks. The Company's core communications platform enables the delivery of a range of enterprise and consumer calling, messaging and collaboration communication services, including private brand exchanges, video calling, text messaging and converged mobile and fixed-line services.
Financial Statements
The financial statements set forth below are not the complete set of the Company's financial statements for the quarter and are presented below without footnotes. Readers are encouraged to obtain and carefully review BroadSoft's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, including all financial statements contained therein and the footnotes thereto, when it is filed with the SEC. Once filed with the SEC, the Form 10-Q may be retrieved from the SEC's website at www.sec.gov or from BroadSoft's website at www.broadsoft.com.
BSFT-F
BroadSoft, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
June 30, December 31,
2012 2011
------------ ------------
(In thousands, except
share and per share data)
Assets:
Current assets:
Cash and cash equivalents $ 84,253 $ 94,072
Short-term investments 89,568 92,749
Accounts receivable, net of allowance for
doubtful accounts of $379 and $54 at June 30,
2012 and December 31, 2011, respectively 39,839 47,048
Deferred tax assets 12,409 12,968
Other current assets 7,451 4,435
------------ ------------
Total current assets 233,520 251,272
------------ ------------
Long-term assets:
Property and equipment, net 4,708 4,221
Long-term investments 20,405 5,000
Restricted cash 959 959
Intangible assets, net 7,682 8,842
Goodwill 20,207 17,276
Other long-term assets 7,310 3,386
------------ ------------
Total long-term assets 61,271 39,684
------------ ------------
Total assets $ 294,791 $ 290,956
============ ============
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable and accrued expenses $ 12,272 $ 14,999
Notes payable and bank loans, current portion 475 891
Deferred revenue, current portion 46,816 55,372
------------ ------------
Total current liabilities 59,563 71,262
Convertible senior notes 84,048 81,737
Notes payable and bank loans 448 461
Deferred revenue 1,978 1,764
Deferred tax liabilities 3,973 1,433
Other long-term liabilities 1,149 1,056
------------ ------------
Total liabilities 151,159 157,713
------------ ------------
Stockholders' equity:
Common stock, par value $0.01 per share;
100,000,000 shares authorized at June 30, 2012
and December 31, 2011; 27,581,558 and
27,106,393 shares issued and outstanding at
June 30, 2012 and December 31, 2011,
respectively 276 271
Additional paid-in capital 198,710 191,714
Accumulated other comprehensive loss (3,226) (2,557)
Accumulated deficit (52,128) (56,185)
------------ ------------
Total stockholders' equity 143,632 133,243
------------ ------------
Total liabilities and stockholders' equity $ 294,791 $ 290,956
============ ============
BroadSoft, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2012 2011 2012 2011
--------- --------- --------- ---------
(In thousands, except per share data)
Revenue:
Licenses $ 22,501 $ 19,202 $ 43,766 $ 34,393
Maintenance and services 18,015 12,977 35,093 27,440
--------- --------- --------- ---------
Total revenue 40,516 32,179 78,859 61,833
Cost of revenue:
Licenses 2,515 1,345 4,575 2,621
Maintenance and services 5,249 4,635 10,702 8,950
Amortization of intangibles 557 251 1,116 490
--------- --------- --------- ---------
Total cost of revenue 8,321 6,231 16,393 12,061
--------- --------- --------- ---------
Gross profit 32,195 25,948 62,466 49,772
Operating expenses:
Sales and marketing 11,608 9,077 22,680 17,561
Research and development 9,131 6,730 17,607 13,546
General and administrative 5,880 4,496 11,694 8,882
--------- --------- --------- ---------
Total operating expenses 26,619 20,303 51,981 39,989
--------- --------- --------- ---------
Income from operations 5,576 5,645 10,485 9,783
Other expense, net: 1,603 194 3,182 171
--------- --------- --------- ---------
Income before income taxes 3,973 5,451 7,303 9,612
Provision for (benefit from)
income taxes 1,617 (10,340) 3,246 (9,874)
--------- --------- --------- ---------
Net income $ 2,356 $ 15,791 $ 4,057 $ 19,486
========= ========= ========= =========
Net income per common share
available to BroadSoft, Inc.
common stockholders:
Basic $ 0.09 $ 0.59 $ 0.15 $ 0.74
Diluted $ 0.08 $ 0.57 $ 0.14 $ 0.70
Weighted average common shares
outstanding:
Basic 27,550 26,670 27,392 26,189
Diluted 28,253 27,939 28,238 27,796
Stock-based compensation expense
included above:
Cost of revenue $ 483 $ 211 $ 891 $ 277
Sales and marketing 1,391 415 2,528 749
Research and development 1,101 510 1,900 757
General and administrative 806 765 1,653 1,220
Summary of Consolidated Cash Flow Activity
(unaudited)
Six Months Ended
June 30,
------------------
2012 2011
-------- --------
(in thousands)
Net cash provided by operating activities 8,233 12,025
Net cash used in investing activities (17,103) (19,090)
Net cash (used in) provided by financing activities (904) 117,727
BroadSoft, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Three
Three Months Ended Months Six Months Ended
June 30, Ended June 30,
March 31,
2012 2011 2012 2012 2011
--------- --------- --------- --------- ---------
(In thousands)
Non-GAAP gross
profit:
GAAP gross profit $ 32,195 $ 25,948 $ 30,271 $ 62,466 $ 49,772
(percent of total
revenue) 79% 81% 79% 79% 80%
Plus:
Stock-based
compensation
expense 483 211 408 891 277
Amortization of
acquired
intangible assets 557 251 559 1,116 490
--------- --------- --------- --------- ---------
Non-GAAP gross profit $ 33,235 $ 26,410 $ 31,238 $ 64,473 $ 50,539
========= ========= ========= ========= =========
(percent of total
revenue) 82% 82% 81% 82% 82%
GAAP license gross
profit $ 19,429 $ 17,606 $ 18,646 $ 38,075 $ 31,282
(percent of related
revenue) 86% 92% 88% 87% 91%
Plus:
Stock-based
compensation
expense 174 62 141 315 92
Amortization of
acquired
intangible assets 557 251 559 1,116 490
Non-GAAP license
gross profit $ 20,160 $ 17,919 $ 19,346 $ 39,506 $ 31,864
========= ========= ========= ========= =========
(percent of related
revenue) 90% 93% 91% 90% 93%
GAAP maintenance and
services gross
profit $ 12,766 $ 8,342 $ 11,625 $ 24,391 $ 18,490
(percent of related
revenue) 71% 64% 68% 70% 67%
Plus:
Stock-based
compensation
expense 309 149 267 576 185
Non-GAAP maintenance
and services gross
profit $ 13,075 $ 8,491 $ 11,892 $ 24,967 $ 18,675
========= ========= ========= ========= =========
(percent of related
revenue) 73% 65% 70% 71% 68%
BroadSoft, Inc.
Reconciliation of Non-GAAP Financial Measures (continued)
(Unaudited)
Three
Three Months Ended Months Six Months Ended
June 30, Ended June 30,
March 31,
2012 2011 2012 2012 2011
--------- --------- --------- --------- ---------
(In thousands)
Non-GAAP income from
operations:
GAAP income from
operations $ 5,576 $ 5,645 $ 4,909 $ 10,485 $ 9,783
(percent of total
revenue) 14% 18% 13% 13% 16%
Plus:
Stock-based
compensation
expense 3,781 1,901 3,191 6,972 3,003
Amortization of
acquired
intangible assets 557 251 559 1,116 490
--------- --------- --------- --------- ---------
Non-GAAP income from
operations $ 9,914 $ 7,797 $ 8,659 $ 18,573 $ 13,276
========= ========= ========= ========= =========
(percent of total
revenue) 24% 24% 23% 24% 21%
GAAP operating
expense $ 26,619 $ 20,303 $ 25,362 $ 51,981 $ 39,989
Less:
Stock-based
compensation
expense 3,298 1,690 2,783 6,081 2,726
--------- --------- --------- --------- ---------
Non-GAAP operating
expense $ 23,321 $ 18,613 $ 22,579 $ 45,900 $ 37,263
========= ========= ========= ========= =========
(as percent of
total revenue) 58% 58% 59% 58% 60%
GAAP sales and
marketing expense $ 11,608 $ 9,077 $ 11,072 $ 22,680 $ 17,561
Less:
Stock-based
compensation
expense 1,391 415 1,137 2,528 749
--------- --------- --------- --------- ---------
Non-GAAP sales and
marketing expense $ 10,217 $ 8,662 $ 9,935 $ 20,152 $ 16,812
========= ========= ========= ========= =========
(as percent of
total revenue) 25% 27% 26% 26% 27%
GAAP research and
development expense $ 9,131 $ 6,730 $ 8,476 $ 17,607 $ 13,546
Less:
Stock-based
compensation
expense 1,101 510 799 1,900 757
--------- --------- --------- --------- ---------
Non-GAAP research and
development expense $ 8,030 $ 6,220 $ 7,677 $ 15,707 $ 12,789
========= ========= ========= ========= =========
(as percent of
total revenue) 20% 19% 20% 20% 21%
GAAP general and
administrative
expense $ 5,880 $ 4,496 $ 5,814 $ 11,694 $ 8,882
Less:
Stock-based
compensation
expense 806 765 847 1,653 1,220
--------- --------- --------- --------- ---------
Non-GAAP general and
administrative
expense $ 5,074 $ 3,731 $ 4,967 $ 10,041 $ 7,662
========= ========= ========= ========= =========
(as percent of
total revenue) 13% 12% 13% 13% 12%
BroadSoft, Inc.
Reconciliation of Non-GAAP Financial Measures (continued)
(Unaudited)
Three
Three Months Ended Months Six Months Ended
June 30, Ended June 30,
March 31,
2012 2011 2012 2012 2011
--------- --------- --------- --------- ---------
(In thousands, except per share data)
Non-GAAP net income and
income per share:
GAAP net income $ 2,356 $ 15,791 $ 1,701 $ 4,057 $ 19,486
Adjusted for:
Stock-based
compensation expense 3,781 1,901 3,191 6,972 3,003
Amortization of
acquired intangible
assets 557 251 559 1,116 490
Non-cash interest
expense on our
convertible notes 1,273 172 1,242 2,515 172
Non-cash tax provision
(benefit) 1,425 (10,496) 1,463 2,888 (10,140)
--------- --------- --------- --------- ---------
Non-GAAP net income $ 9,392 $ 7,619 $ 8,156 $ 17,548 $ 13,011
========= ========= ========= ========= =========
GAAP net income per
basic common share $ 0.09 $ 0.59 $ 0.06 $ 0.15 $ 0.74
Adjusted for:
Stock-based
compensation expense 0.14 0.07 0.12 0.25 0.11
Amortization of
acquired intangible
assets 0.02 0.01 0.02 0.04 0.02
Non-cash interest
expense on our
convertible notes 0.04 0.01 0.05 0.09 0.01
Non-cash tax provision
(benefit) 0.05 (0.39) 0.05 0.11 (0.38)
--------- --------- --------- --------- ---------
Non-GAAP net income per
basic common share $ 0.34 $ 0.29 $ 0.30 $ 0.64 $ 0.50
========= ========= ========= ========= =========
GAAP net income per
diluted common share $ 0.08 $ 0.57 $ 0.06 $ 0.14 $ 0.70
Adjusted for:
Stock-based
compensation expense 0.13 0.07 0.11 0.25 0.11
Amortization of
acquired intangible
assets 0.02 0.01 0.02 0.04 0.02
Non-cash interest
expense on our
convertible notes 0.05 0.01 0.05 0.09 0.01
Non-cash tax provision
(benefit) 0.05 (0.39) 0.05 0.10 (0.37)
--------- --------- --------- --------- ---------
Non-GAAP net income per
diluted common share $ 0.33 $ 0.27 $ 0.29 $ 0.62 $ 0.47
--------- --------- --------- --------- ---------
Contact Information
For further information contact:
Investor Relations:
John Kiang
+1-240-720-0625
jkiang@broadsoft.com
Industry Analyst / Media Relations:
Elaine Myada
+1-240-720-9558
emyada@broadsoft.com
Brian Lustig
+1-301-775-6203
brian@lustigcommunications.com
