Exhibit 99.1
Double-Take Software, Inc. Announces Fourth Quarter and Year End 2009 Financial Results
Company Reports Solid Earnings and Strong Cash Flow
Company Announces Stock Repurchase Program
SOUTHBOROUGH, Mass.--(BUSINESS WIRE)--February 3, 2010--Double-Take Software, Inc. (NASDAQ: DBTK), a leading provider of recovery solutions, today announced its financial results for the fourth quarter and year ended December 31, 2009.
“We were pleased with both our earnings and cash flow for the quarter and the year. Despite the market pressure on our license sales, particularly in the SMB and financial markets, our operating margins were robust. In several areas, we saw growth including the Federal sector, the Asia Pacific region, and our Double-Take Back-Up product line. Additionally, we introduced Double-Take Move, which won the Best of Tech Ed Award at Microsoft’s Tech Ed conference and a new Double-Take Back-Up has been nominated for product of the year award by SearchStorage,” said Dean Goodermote, Chairman and CEO of Double-Take Software, Inc.
Total revenue for the fourth quarter of 2009 decreased 8.7% to $22.8 million from $25.0 million in the fourth quarter of 2008. Software revenue decreased 16.6% to $11.7 million in the fourth quarter of 2009 from $14.1 million in the fourth quarter of 2008. Maintenance and professional services revenue increased 1.5% to $11.0 million in the fourth quarter of 2009 from $10.9 million in the fourth quarter of 2008. On a constant currency basis, total revenue in the fourth quarter of 2009 declined by 10.6%, software revenue declined by 18.2% and maintenance and professional services revenue decreased by 0.8% compared to the fourth quarter of 2008.
Income from operations was $4.0 million in the fourth quarter of 2009 compared to $5.3 million in the fourth quarter of 2008.
The Company recorded a net income tax benefit of $6.5 million in the fourth quarter of 2009 compared to a benefit of $5.1 million in the fourth quarter of 2008. In the fourth quarter of 2009, the Company completed its ongoing analysis of its tax obligations and the utilization of its net operating loss carryforwards. As a result of this analysis, the Company recorded a net tax benefit of approximately $8.7 million which increased diluted EPS by $0.37 per share. The net tax benefit was primarily related to reversals of valuation allowances on deferred tax assets. The combination of income taxes on income for the fourth quarter of 2009 of $2.2 million and the net tax benefits of $8.7 million recorded in the quarter resulted in the net income tax benefit of $6.5 million. In the fourth quarter of 2008, the Company reversed the valuation allowance on approximately $7.4 million of deferred tax assets which increased diluted EPS by $0.31 per share. Taxes on income generated in the fourth quarter of 2008 were approximately $2.3 million which resulted in a net income tax benefit in the quarter of $5.1 million.
Net income, including the benefit from the income tax items described above, totaled $10.6 million, or $0.45 per diluted share in the fourth quarter of 2009 compared with $10.2 million, or $0.44 per diluted share, in the fourth quarter of 2008.
Income from operations on an adjusted, non-GAAP basis in the fourth quarter of 2009 was $5.1 million compared with $6.3 million in the fourth quarter of 2008. Adjusted, non-GAAP net income in the fourth quarter of 2009 was $11.7 million, or $0.50 per diluted share, including the $0.37 per share fourth quarter benefit related to income taxes. This compares with $11.2 million, or $0.48 per diluted share, including $0.31 per share from tax related items, in the fourth quarter of 2008.
The Company calculates these adjusted non-GAAP income measures stated above and for the full year as stated below by excluding the effects in the respective periods of the non-cash stock based compensation. An explanation of these adjusted, non-GAAP financial measures and a reconciliation of these measures to GAAP results are provided in the tables included in this press release, and these measures should only be viewed together with the reconciliation and the further explanation given under “Non-GAAP Financial Measures” below.
Cash generated from operations was $7.3 million in the fourth quarter of 2009. Cash and short term investments at December 31, 2009 totaled $96.2 million, an increase of approximately $6.8 million from September 30, 2009.
For the full year, total revenue decreased 13.6% to $83.2 million for the year ended December 31, 2009, from $96.3 million for the year ended December 31, 2008. Software revenue for the full year decreased 24.2% to $40.1 million for the year ended December 31, 2009, from $52.9 million for the year ended December 31, 2008. Maintenance and professional services revenue decreased 0.6% to $43.1 million for the year ended December 31, 2009, from $43.4 million for the year ended December 31, 2008.
Income from operations was $10.2 million for the year ended December 31, 2009 compared to $17.6 million for the year ended December 31, 2008.
The Company recorded an income tax benefit of $3.1 million for the year ended December 31, 2009 compared to an income tax expense of $0.7 million for the year ended December 31, 2008. Tax expense for each year has been reduced due to the reversal of the valuation allowance on certain deferred tax assets and other year end tax items which impacted income tax expense. The net benefit of these items was approximately $8.7 million or $0.37 per diluted share for the year ended December 31, 2009 and approximately $7.4 million or $0.32 per share for the year ended December 31, 2008.
Net income, which includes the effect of the income tax items discussed above, totaled $13.5 million, or $0.58 per diluted share for the year ended December 31, 2009 compared with $17.6 million, or $0.76 per diluted share, in the same period in 2008.
Income from operations on an adjusted, non-GAAP basis for the year ended December 31, 2009 was $14.6 million compared with $21.5 million for the year ended December 31, 2008. Adjusted, non-GAAP net income, including the effect of the income tax items of $0.37 per share for 2009 and $0.32 per share for 2008 was $17.9 million or $0.77 per diluted share for the year ended December 31, 2009, compared with $21.6 million, or $0.93 per diluted share, for the year ended December 31, 2008. As noted above in each case these non-GAAP financial measures exclude the effects in the respective periods of the non-cash stock based compensation.
Stock Repurchase Program
Double-Take Software, Inc. also announced today that the Company's Board of Directors has approved the repurchase of up to an aggregate of $15 million of the Company's common stock. The Company may repurchase Double-Take Software, Inc. common stock in the open market at prevailing market prices or in privately negotiated transactions from time to time based upon market and business conditions. Repurchases may also be made through a trading plan under SEC Rule 10b5-1. The stock repurchase program may be suspended or discontinued at any time, and will be funded using the Company's available cash.
2010 Financial Guidance
The Company is providing guidance for the first quarter and full year 2010 as follows: Revenue for the first quarter of 2010 is expected to be in the range of $20.0 to $21.2 million and $90.0 to $95.0 million for the full year.
Guidance for adjusted non-GAAP operating income for the first quarter is $0.6 to $1.5 million and $11.0 to $14.7 million for the full year 2010. Non-GAAP net income per share for the first quarter is expected to be in the range of $0.02 to $0.04 and $0.29 to $0.39 for full year excluding the impact of stock-based compensation charges, and assuming a 38% effective income tax rate. Weighted average diluted shares using the treasury method are expected to be approximately 23.6 million for the first quarter and 23.8 million for the full year 2010, excluding the effect of any shares that may be repurchased under the share repurchase plan which can’t be estimated.
“We are enthusiastic about the potential to expand into additional markets in 2010 and 2011. We believe that our target markets have stabilized, and that now is the right time to invest more heavily in some of our new products, such as our Cloud Computing initiatives, and geographically in Asia and Latin America,” stated Goodermote.
See “Non-GAAP Financial Measures” and “Important Note to Investors” below.
Non-GAAP Financial Measures
Double-Take Software, Inc. has provided in this press release adjusted financial information that has not been prepared in accordance with generally accepted accounting principles, or GAAP. These non-GAAP financial measures are identified above as “adjusted, non-GAAP” measures. Double-Take Software, Inc. uses these non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to, but not as a substitute for, GAAP measures, in evaluating the Company’s operational performance. Double-Take Software, Inc. believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating operating results and trends, and in comparing its financial results with other companies in Double-Take Software, Inc.’s industry, many of which present similar non-GAAP financial measures to investors. The historical non-GAAP financial measures presented above exclude the following item required to be included by GAAP: non-cash stock-based compensation charges. The Company’s expectations for adjusted, non-GAAP income and income per share for the first quarter of 2010 and full year 2010 exclude the impact of stock-based compensation charges, the amount and significance of which, because of the information and assumptions underlying those charges, cannot readily be determined at this time.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of historic non-GAAP financial measures presented above to GAAP results has been provided in the financial statement tables included in this press release.
Conference Call Information
Double-Take Software, Inc. will discuss these financial results in a conference call at 4:30 p.m. EST, today. The public is invited to listen to a live web cast of Double-Take Software, Inc.’s conference call on the Investor Relations section of the company website at www.doubletake.com. For those who are unable to participate in the live conference call, an audio replay will be available until February 8, 2010 at 7:30 p.m. EST. To access the audio replay, dial 888-203-1112 or 719-457-0820 and enter access code 6210413. A web cast replay of the call will be available on the Investor Relations section at www.doubletake.com approximately two hours after the conclusion of the call and will remain available for approximately three months.
About Double-Take® Software
Headquartered in Southborough, Massachusetts, Double-Take® Software (Nasdaq: DBTK) is a leading provider of affordable workload optimization products that are simple to use and enable IT managers to easily move, protect, recover and more flexibly run critical IT workloads in physical and virtual environments, regardless of platform or location. With its unparalleled partner programs, technical support, and professional services, Double-Take Software is the solution of choice for about 22,000 customers worldwide, from SMEs to the Fortune 500. Information about Double-Take Software’s products and services can be found at www.doubletake.com.
Important Note to Investors
This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases that say Double-Take or its management "believes," "expects," "anticipates," "foresees," "forecasts," "estimates" or other words or phrases of similar import. Similarly, statements in this release that describe the Company's business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All forward-looking statements are inherently speculative, and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in forward-looking statements. These risks and uncertainties include those set forth from time to time in our filings with the Securities and Exchange Commission. We are under no obligation, and do not undertake any duty, to update these forward looking statements at any time.
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| Double-Take Software, Inc. |
| Condensed Consolidated Balance Sheets |
| (in thousands) |
| (Unaudited) |
| | | Dec 31, | | | | | Dec 31, |
| | | 2009 | | | | | 2008 |
| ASSETS | | | | | | | | |
| | | | | | | | |
| Current assets: | | | | | | | | |
| Cash and cash equivalents | | | $57,974 | | | | | $40,659 |
| Short term investments | | | 38,246 | | | | | 32,524 |
| Accounts receivable, net | | | 16,676 | | | | | 19,593 |
| Prepaid expenses and other current assets | | | 1,153 | | | | | 6,012 |
| Deferred tax assets | | | 5,565 | | | | | 5,438 |
Total current assets | | | 119,614 | | | | | 104,226 |
| | | | | | | | |
| Property and equipment, net | | | 3,074 | | | | | 4,236 |
| Intangibles, net | | | 4,898 | | | | | 5,963 |
| Goodwill | | | 18,099 | | | | | 16,267 |
| Other assets | | | 786 | | | | | 739 |
| Long-term deferred tax assets | | | 5,460 | | | | | - |
| Total assets | | | $151,931 | | | | | $131,431 |
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| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | |
| Current liabilities: | | | | | | | | |
| Accounts payable and accrued expenses | | | 6,348 | | | | | 6,422 |
| Other liabilities | | | 665 | | | | | 390 |
| Deferred revenue | | | 25,977 | | | | | 26,469 |
| Total current liabilities | | | 32,990 | | | | | 33,281 |
| | | | | | | | |
| Long-term deferred revenue, less current portion | | | 4,726 | | | | | 4,614 |
| Other long-term liabilities | | | 144 | | | | | 126 |
| | | | | | | | |
| Stockholders' equity | | | 114,071 | | | | | 93,410 |
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| Total liabilities and stockholders' equity | | | $151,931 | | | | | $131,431 |
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Note: Certain reclassifications have been made to prior year amounts to
conform to current period classifications. |
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| Double-Take Software, Inc. |
| Consolidated Income Statements |
| (In thousands, except per share data) |
| (Unaudited) |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | Three Months Ended | | | | | Twelve Months Ended |
| | | Dec. 31, | | | | | Dec. 31, |
| | | 2009 | | | 2008 | | | | | 2009 | | | 2008 |
| Revenue: | | | | | | | | | | | | | | |
| Software licenses | | | $11,729 | | | $14,068 | | | | | $40,100 | | | $52,923 |
| Maintenance and professional services | | | 11,048 | | | 10,888 | | | | | 43,137 | | | 43,380 |
| Total revenue | | | 22,777 | | | 24,956 | | | | | 83,237 | | | 96,303 |
| | | | | | | | | | | | | | |
| Cost of revenue: | | | | | | | | | | | | | | |
| Software licenses | | | 117 | | | 192 | | | | | 462 | | | 589 |
| Maintenance and professional services | | | 2,190 | | | 2,424 | | | | | 8,445 | | | 9,622 |
| Total cost of revenue | | | 2,307 | | | 2,616 | | | | | 8,907 | | | 10,211 |
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| Gross profit | | | 20,470 | | | 22,340 | | | | | 74,330 | | | 86,092 |
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| Operating expenses: | | | | | | | | | | | | | | |
| Sales and marketing | | | 8,705 | | | 8,635 | | | | | 32,371 | | | 34,928 |
| Research and development | | | 3,732 | | | 4,061 | | | | | 15,275 | | | 16,540 |
| General and administrative | | | 3,087 | | | 3,374 | | | | | 12,547 | | | 13,419 |
| Depreciation and amortization | | | 979 | | | 996 | | | | | 3,986 | | | 3,638 |
| Total operating expenses | | | 16,503 | | | 17,066 | | | | | 64,179 | | | 68,525 |
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| Income from operations | | | 3,967 | | | 5,274 | | | | | 10,151 | | | 17,567 |
| | | | | | | | | | | | | | |
| Other income (expense), net | | | 76 | | | (185) | | | | | 181 | | | 802 |
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| Income before income taxes | | | 4,043 | | | 5,089 | | | | | 10,332 | | | 18,369 |
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| Income tax expense (benefit) | | | (6,533) | | | (5,127) | | | | | (3,127) | | | 724 |
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| Net income | | | 10,576 | | | 10,216 | | | | | 13,459 | | | 17,645 |
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| Net income per share: | | | | | | | | | | | | | | |
| Basic | | | $0.47 | | | $0.46 | | | | | $0.60 | | | $0.80 |
| Diluted | | | $0.45 | | | $0.44 | | | | | $0.58 | | | $0.76 |
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| Weighted-average number of shares used in per share amounts: | | | | | | | | | | | | | | |
| Basic | | | 22,405 | | | 22,003 | | | | | 22,325 | | | 21,971 |
| Diluted | | | 23,396 | | | 23,224 | | | | | 23,284 | | | 23,173 |
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| Double-Take Software, Inc. |
| Consolidated Statements of Cash Flows |
| (In thousands) |
| (Unaudited) |
| | | | | | | |
| | | Twelve months ended |
| | | Dec. 31, |
| | | 2009 | | | | | 2008 | |
| | | | | | | |
| Cash flows from operating activities: | | | | | | | |
| Net Income | | | $13,459 | | | | | $17,645 | |
Adjustments to reconcile net income to net cash provided
by operating activities: | | | | | | | |
| Depreciation | | | 2,408 | | | | | 2,348 | |
| Amortization of intangible assets | | | 1,578 | | | | | 1,290 | |
| Provision for (recovery of) doubtful accounts | | | (100 | ) | | | | (174 | ) |
| Stock based compensation | | | 4,429 | | | | | 3,948 | |
| Deferred income taxes | | | (5,587 | ) | | | | 451 | |
| Excess tax benefits from stock based compensation | | | (76 | ) | | | | (163 | ) |
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| Changes in: | | | | | | | |
| Accounts receivable | | | 3,134 | | | | | (1,413 | ) |
| Prepaid expenses and other assets | | | 4,934 | | | | | (1,258 | ) |
| Other assets | | | (14 | ) | | | | (579 | ) |
| Accounts payable and accrued expenses | | | (259 | ) | | | | (3,113 | ) |
| Other liabilities | | | 333 | | | | | (324 | ) |
| Deferred revenue | | | (653 | ) | | | | 2,849 | |
| Net cash provided by operating activities | | | $ 23,586 | | | | | $ 21,507 | |
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| Cash flows from investing activities: | | | | | | | |
| Purchase of property and equipment | | | (1,186 | ) | | | | (2,458 | ) |
| Purchase of short term investments | | | (73,493 | ) | | | | (67,226 | ) |
| Sales and maturities of short term investments | | | 67,855 | | | | | 73,492 | |
| Acquisitions, net of cash acquired | | | - | | | | | (10,275 | ) |
| Net cash (used in) investing activities | | | $ (6,824 | ) | | | | $ (6,467 | ) |
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| Cash flows from financing activities: | | | | | | | |
| Proceeds from exercise of stock options | | | 122 | | | | | 114 | |
| Excess tax benefits from stock based compensation | | | 76 | | | | | 163 | |
| Payments on capital lease obligation | | | (25 | ) | | | | (44 | ) |
| Net cash provided by financing activities | | | $ 173 | | | | | $ 233 | |
| | | | | | | |
| Effect of exchange rate changes on cash and cash equivalents | | | 380 | | | | | (362 | ) |
| Net increase in cash and cash equivalents | | | 16,935 | | | | | 15,273 | |
| Cash and cash equivalents - beginning of period | | | 40,659 | | | | | 25,748 | |
| Cash and cash equivalents - end of period | | | $ 57,974 | | | | | $ 40,659 | |
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Note: Certain reclassifications have been made to prior year amounts to conform
to current period classifications. |
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| Double-Take Software, Inc. |
| Reconciliation of GAAP to Non-GAAP Financial Measures |
| (In thousands, except per share data) |
| (Unaudited) |
| | | | | | | | | | | | |
| Three Months Ended | | | | | Twelve Months Ended |
| Dec. 31, | | | | | Dec. 31, |
| 2009 | | | 2008 | | | | | 2009 | | | 2008 |
| | | | | | | | | | | | |
| Non-GAAP financial measures and reconciliation: | | | | | | | | | | | | |
| | | | | | | | | | | | |
| GAAP income from operations | $ 3,967 | | | $ 5,274 | | | | | $ 10,151 | | | $ 17,567 |
| Add: noncash stock based compensation (1) | 1,099 | | | 989 | | | | | 4,429 | | | 3,948 |
| Non-GAAP income from operations | $ 5,066 | | | $ 6,263 | | | | | $ 14,580 | | | $ 21,515 |
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| GAAP net income | $ 10,576 | | | $ 10,216 | | | | | $ 13,459 | | | $ 17,645 |
| Add: noncash stock based compensation (1) | 1,099 | | | 989 | | | | | 4,429 | | | 3,948 |
| Non-GAAP net income | $ 11,675 | | | $ 11,205 | | | | | $ 17,888 | | | $ 21,593 |
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| Non-GAAP income per share: | | | | | | | | | | | | |
| Basic | $0.52 | | | $0.51 | | | | | $0.80 | | | $0.98 |
| Diluted | $0.50 | | | $0.48 | | | | | $0.77 | | | $0.93 |
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| Weighted-average number of shares used in per share amounts: | | | | | | | | | | | | |
| | | | | | | | | | | | |
| Basic | 22,405 | | | 22,003 | | | | | 22,325 | | | 21,971 |
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| GAAP diluted shares outstanding | 23,396 | | | 23,224 | | | | | 23,284 | | | 23,173 |
| Add: effect of excluding stock based compensation | 40 | | | 169 | | | | | 53 | | | 102 |
| Non-GAAP diluted shares outstanding | 23,436 | | | 23,393 | | | | | 23,337 | | | 23,275 |
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Footnotes to Adjustments | | | | | | | | | | | | |
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| (1) Represents noncash stock based compensation charges as follows: | | | | | | | | | | | | |
| Three Months Ended | | | | | Twelve Months Ended |
| Dec. 31, | | | | | Dec. 31, |
| 2009 | | | 2008 | | | | | 2009 | | | 2008 |
| Stock option expense by line item: | | | | | | | | | | | | |
| Cost of maintenance and professional services | $109 | | | $93 | | | | | $421 | | | $369 |
| Sales and marketing | 242 | | | 210 | | | | | 974 | | | 827 |
| Research and development | 305 | | | 281 | | | | | 1,216 | | | 1,066 |
| General and administrative | 443 | | | 405 | | | | | 1,818 | | | 1,686 |
| $1,099 | | | $989 | | | | | $4,429 | | | $3,948 |
CONTACT:
Double-Take Software, Inc.
S. Craig Huke, 317-572-1857
Chief Financial Officer
investor@doubletake.com
or
Sapphire Investor Relations, LLC
Erica Mannion, 212-766-1800
Investor Relations
investor@doubletake.com
