Exhibit 99.1
Actuate Reports First Quarter 2007 Financial Results
20% Year-over-Year License Revenue Growth
67% Increase in Year-over-Year Non-GAAP EPS
SOUTH SAN FRANCISCO, Calif.--(BUSINESS WIRE)--April 26,
2007--Actuate Corporation (NASDAQ:ACTU), the leader in Business
Intelligence, Performance Management and Reporting Applications, today
announced its financial results for the quarter ended March 31, 2007.
Revenues for the first quarter of 2007 were $32.0 million, a 7%
increase compared with the first quarter of 2006. License revenues for
the first quarter of 2007 were $12.0 million, a 20% increase from the
year-ago quarter. Net income for the first quarter of 2007, as
reported in accordance with U.S. generally accepted accounting
principles (GAAP), was $1.4 million, or $0.02 per diluted share,
compared with a net loss of $470,000 or $0.01 per share in the first
quarter of 2006. First quarter 2007 results included a $1.9 million
charge related to FAS 123R, which requires that stock-based
compensation expense be included in GAAP results.
Non-GAAP net income for the first quarter of 2007 was $3.4
million, or $0.05 per diluted share, compared with non-GAAP net income
of $2.0 million, or $0.03 per diluted share in the first quarter of
2006. Non-GAAP operating margin for the first quarter of 2007 was 13%
compared with a non-GAAP operating margin of 8% for the first quarter
of 2006.
Non-GAAP financial measures discussed in this release exclude the
following items: a) amortization charges for purchased technology and
other intangible assets related to the Company's acquisition
transactions; b) stock-based compensation expense; c) restructuring
charges; d) in-process research and development charges related to the
Company's acquisition transactions; and e) an adjustment to the income
tax provision. All of these expenses are included in Actuate's GAAP
results.
"Strong demand for BI, Performance Management and Reporting
applications continued in Q1," said Pete Cittadini, Actuate's
president and CEO. "Our solid Q1 results, particularly the growth of
license revenues, validate our new hybrid Open Source / Enterprise
business model and puts us on track to meet our objectives for 2007.
"During the first quarter of 2007, we recorded our biggest quarter
for BIRT downloads, putting us on course to exceed one million
downloads by the middle of this year, and our BIRT-based commercial
offerings continued to gain traction. We also experienced very strong
demand for Extranet applications among our large Financial Services
customers as they update their Customer Self Service sites with more
interactive capabilities."
First Quarter 2007 Financial Highlights
-- Grew license revenues by 20% on a year-over-year basis,
marking the fifth consecutive quarter of double-digit
year-over-year license revenue growth;
-- Increased cash, cash equivalents and short-term investments to
a record $69.0 million at March 31, 2007;
-- Generated a record $11.9 million in cash flow from operations;
-- Increased deferred revenue 25% on a year-over-year basis, to a
record $41.9 million at March 31, 2007;
-- Maintained non-GAAP services margin at 70%;
-- Repurchased approximately 830,000 shares at a total cost of
approximately $4.6 million.
First Quarter Customer Highlights
During the first quarter, Actuate received significant new and
repeat business from, among others, Affiliated Computer Services,
Citigroup, Computer Associates, Deltek Systems, Deutsche Bank, DWS
Holding and Service GmbH, IBM UK, Lifetime Group Ltd., Medco Health
Solutions, Mellon Financial, Odyssey Asset Management, Riverside
County Office of Education, Oracle Corporation, Standard Bank London
Ltd., UBS AG, Unilever, Verid, Verisign, Watson Wyatt, XLsoft
Corporation and York University.
First Quarter Business Highlights
-- Exceeded 200,000 downloads of BIRT and Actuate BIRT during Q1,
surpassing 850,000 downloads since introduction;
-- The Franklin Institute (TFI), Philadelphia's well known
non-profit science museum, is using Actuate's Enterprise
Reporting software to measure attendance efficiently and
immediately and adjust its operations accordingly;
-- American Suzuki Motor Corporation, a distributor for Suzuki
Motor Corporation, has implemented 16 centrally managed
Actuate applications that enable the Company to increase
profitability by providing web-based operational reports to
the field and corporate offices to improve dealer performance
and inventory management;
-- Announced deployment of Actuate Performancesoft Suite at
Achieve Healthcare Technologies, United Kingdom's Wiltshire
Police Constabulary and Florida Surplus Lines Service Office,
increasing visibility and sharing of Performance Management
information to facilitate better decision-making at those
organizations.
Conference Call Information
Actuate will be holding a conference call at 2:00 p.m. Pacific
Time, today, April 26, 2007 to further discuss these results. The
dial-in number for the call is 877-502-9274 (+1 913-981-5584 for
international participants) and the passcode is 6416624.
A listen-only live webcast of the first quarter 2007 earnings
conference call, with an accompanying slide presentation, will also be
available at the investor relations section of the Actuate website at
http://phx.corporate-ir.net/phoenix.zhtml?c=64401&p=irol-irhome, and
will be available in the same location on an archived basis
thereafter.
Discussion of Non-GAAP Financial Measures
This press release contains financial measures that are not
calculated in accordance with U.S. generally accepted accounting
principles (GAAP). Actuate management evaluates and makes operating
decisions using various performance measures. In addition to our GAAP
results, we also consider adjusted net income, which we refer to as
non-GAAP net income. We further consider various components of
non-GAAP net income such as non-GAAP gross margin and non-GAAP
operating expense. Non-GAAP net income is generally based on the
revenues of our product, maintenance and services business operations
and the costs of those operations, such as cost of revenue, research
and development, sales and marketing and general and administrative
expenses, that management considers in evaluating our ongoing core
operating performance. Non-GAAP net income consists of net income
excluding amortization of intangible assets, merger and acquisition
charges, restructuring charges, equity plan-related compensation
expenses and charges and gains which management does not consider
reflective of our core operating business. Intangible assets consist
primarily of purchased technology, trade names, customer
relationships, employment agreements and other intangible assets
issued in connection with acquisitions. Merger and acquisition charges
represent in-process research and development charges related to
products in development that had not reached technological feasibility
at the time of acquisition. Restructuring charges consist of severance
and benefits, excess facilities and asset-related charges, and also
include strategic reallocations or reductions of personnel resources.
Equity plan-related compensation expenses represent the fair value of
all share-based payments to employees, including grants of employee
stock options, as required under SFAS No. 123 (revised 2004),
"Share-Based Payment" (SFAS 123R). Management does not consider these
unusual expenses associated with a financial transaction to be part of
core operating performance. For purposes of comparability across other
periods and against other companies in our industry, non-GAAP net
income is adjusted by the amount of additional taxes or tax benefit
that the Company would accrue using a normalized effective tax rate
applied to the non-GAAP results.
Non-GAAP net income is a supplemental measure of our performance
that is not required by, nor presented in accordance with, GAAP.
Moreover, it should not be considered as an alternative to net income,
operating income, or any other performance measure derived in
accordance with GAAP, or as an alternative to cash flow from operating
activities or as a measure of our liquidity. We present non-GAAP net
income because we consider it an important supplemental measure of our
performance.
Management excludes from non-GAAP net income certain recurring
items to facilitate its review of the comparability of the Company's
core operating performance on a period to period basis because such
items are not related to the Company's ongoing core operating
performance as viewed by management. Management uses this view of its
operating performance for purposes of comparison with its business
plan and individual operating budgets and allocations of resources.
Additionally, when evaluating potential acquisitions, management
excludes the items described above from its consideration of target
performance and valuation. More specifically, management adjusts for
the excluded items for the following reasons:
a) amortization charges for purchased technology and other
intangible assets related to the Company's acquisition transactions;
b) stock-based compensation expense; c) restructuring charges; d)
in-process research and development charges related to the Company's
acquisition transactions; and e) an adjustment to the income tax
provision.
The Company believes that, in general, these items possess one or
more of the following characteristics: their magnitude and timing is
largely outside of the Company's control; they are unrelated to the
ongoing operation of the business in the ordinary course; they are
unusual and the Company does not expect them to occur in the ordinary
course of business; or they are non-operational, or non-cash expenses
involving stock option grants.
The Company believes that the presentation of these non-GAAP
financial measures is warranted for several reasons:
1) Such non-GAAP financial measures provide an additional
analytical tool for understanding the Company's financial performance
by excluding the impact of items which may obscure trends in the core
operating performance of the business;
2) Since the Company has historically reported non-GAAP results to
the investment community, the Company believes the inclusion of
non-GAAP numbers provides consistency and enhances investors' ability
to compare the Company's performance across financial reporting
periods;
3) These non-GAAP financial measures are employed by the Company's
management in its own evaluation of performance and are utilized in
financial and operational decision making processes, such as budget
planning and forecasting;
4) These non-GAAP financial measures facilitate comparisons to the
operating results of other companies in our industry, which use
similar financial measures to supplement their GAAP results, thus
enhancing the perspective of investors who wish to utilize such
comparisons in their analysis of the Company's performance.
Set forth below are additional reasons why specific items are
excluded from the Company's non-GAAP financial measures:
a) Amortization charges for purchased technology and other
intangible assets are excluded because they are inconsistent in amount
and frequency and are significantly impacted by the timing and
magnitude of the Company's acquisition transactions. We analyze and
measure our operating results without these charges when evaluating
our core performance. Generally, the impact of these charges to the
Company's net income tends to diminish over time following an
acquisition;
b) While stock-based compensation calculated in accordance with
SFAS 123R constitutes an ongoing and recurring expense of the Company,
it is not an expense that typically requires or will require cash
settlement by the Company. We therefore exclude these charges for
purposes of evaluating our core performance as well as with respect to
evaluating any potential acquisition.
c) Restructuring charges are primarily related to severance costs
and/or the disposition of excess facilities driven by modifications of
business strategy. These costs are excluded because they are
inherently variable in size, and are not specifically included in the
Company's annual operating plan and related budget due to the rapidly
changing facts and circumstances typically associated with such
modifications of business strategy;
d) In-process research and development charges are excluded
because they are inconsistent in amount and frequency and are
significantly impacted by the timing and magnitude of the Company's
acquisition transactions. We analyze and measure our operating results
without these charges when evaluating our core performance.
e) Income tax expense is adjusted by the amount of additional
expense or benefit that we would accrue if we used non-GAAP results
instead of GAAP results in the calculation of our tax liability,
taking into consideration the Company's long-term tax structure. The
Company uses a normalized effective tax rate of 30%. This item is
excluded because the rate remains subject to change based on several
factors, including variations over time in the geographic business mix
and statutory tax rates.
In the future, the Company expects to continue reporting non-GAAP
financial measures excluding items described above and the Company
expects to continue to incur expenses similar to the non-GAAP
adjustments described above. Accordingly, exclusion of these and other
similar items in our non-GAAP presentation should not be construed as
an inference that these costs are unusual, infrequent or
non-recurring.
As stated above, the Company presents non-GAAP financial measures
because it considers them to be important supplemental measures of
performance. However, non-GAAP financial measures have limitations as
an analytical tool and should not be considered in isolation or as a
substitute for the Company's GAAP results. In the future, the Company
expects to incur expenses similar to the non-GAAP adjustments
described above and expects to continue reporting non-GAAP financial
measures excluding such items. Some of the limitations in relying on
non-GAAP financial measures are:
-- Amortization of intangibles, though not directly affecting our
current cash position, represent the loss in value as the
technology in our industry evolves, is advanced or is replaced
over time. The expense associated with this loss in value is
not included in the non-GAAP net income presentation and
therefore does not reflect the full economic effect of the
ongoing cost of maintaining our current technological position
in our competitive industry which is addressed through our
research and development program.
-- The Company may engage in acquisition transactions in the
future. Merger and acquisition related charges may therefore
continue to be incurred and should not be viewed as
non-recurring.
-- The Company's stock option and stock purchase plans are
important components of our incentive compensation
arrangements and will be reflected as expenses in our GAAP
results for the foreseeable future under SFAS 123R.
-- The Company's income tax expense will be ultimately based on
its GAAP taxable income and actual tax rates in effect, which
may differ significantly from the 30% rate assumed in our
non-GAAP presentation.
-- Other companies, including other companies in our industry,
may calculate non-GAAP financial measures differently than we
do, limiting their usefulness as a comparative measure.
Pursuant to the requirements of SEC Regulation G, a detailed
reconciliation between the Company's GAAP and non-GAAP financial
results is provided in this press release and is also available in the
investor relations section of the Company's web site at
www.actuate.com. Investors are advised to carefully review and
consider this information strictly as a supplement to the GAAP results
that are contained in this press release and in the Company's SEC
filings.
About Actuate Corporation
Actuate Corporation, the leader in Business Intelligence,
Performance Management and Reporting Applications, enables
organizations to develop solutions that optimize corporate
performance. Applications built on Actuate's open source-based
platform provide all stakeholders inside and outside the firewall,
including employees, customers, partners and citizens with information
that they can easily access and understand to maximize revenue, cut
costs, improve customer satisfaction, streamline operations, create
competitive advantage and make better decisions.
Actuate has over 4,000 customers globally in a diverse range of
business areas including financial services and the public sector.
Founded in 1993, Actuate has headquarters in South San Francisco,
California, with offices worldwide. Actuate is listed on NASDAQ under
the symbol ACTU. For more information on Actuate, visit the Company's
web site at www.actuate.com.
Cautionary Note Regarding Forward Looking Statements: The
statements contained in this press release that are not purely
historical are forward looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934. These include
statements regarding Actuate's expectations, beliefs, hopes,
intentions or strategies regarding the future. All such
forward-looking statements are based upon information available to
Actuate as of the date hereof, and Actuate disclaims any obligation to
update or revise any such forward-looking statements based on changes
in expectations or the circumstances or conditions on which such
expectations may be based. Actual results could differ materially from
Actuate's current expectations. Factors that could cause or contribute
to such differences include, but are not limited to, the general
spending environment for information technology products and services
in general and Business Intelligence, Performance Management and
Reporting Application software in particular, quarterly fluctuations
in our revenues and other operating results, our ability to expand our
international operations, our ability to successfully compete against
current and future competitors, the impact of future acquisitions
(including the Performancesoft, Inc. acquisition) on the Company's
financial and/or operating condition, the ability to increase revenues
through our indirect distribution channels, general economic and
geopolitical uncertainties and other risk factors that are discussed
in Actuate's Securities and Exchange Commission filings, specifically
Actuate's 2006 Annual Report on Form 10-K filed on March 20, 2007.
Copyright(C) 2007 Actuate Corporation. All rights reserved.
Actuate and the Actuate logo are registered trademarks of Actuate
Corporation and/or its affiliates in the U.S. and certain other
countries. All other brands, names or trademarks mentioned may be
trademarks of their respective owners.
ACTUATE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
March 31, December 31,
2007 2006
-------------------------
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $ 69,046 $ 60,079
Accounts receivable, net 22,259 31,233
Other current assets 4,815 5,233
-------------------------
Total current assets 96,120 96,545
Property and equipment, net 4,001 4,379
Goodwill and other intangibles, net 40,207 40,703
Other assets 7,538 5,962
-------------------------
$ 147,866 $ 147,589
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,083 $ 1,590
Restructuring liabilities 2,995 2,897
Accrued compensation 4,438 6,033
Other accrued liabilities 9,227 9,499
Income taxes payable 729 703
Deferred revenue 40,053 38,525
-------------------------
Total current liabilities 58,525 59,247
-------------------------
Long term liabilities:
Deferred rent - 23
Deferred revenue 1,861 2,328
Tax liabilities 4,039 420
Restructuring liabilities 7,136 7,761
-------------------------
Total long term liabilities 13,036 10,532
-------------------------
Stockholders' equity 76,305 77,810
-------------------------
$ 147,866 $ 147,589
=========================
ACTUATE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
--------------------------
2007 2006
------------ ------------
Revenues:
License fees $ 11,990 $ 9,987
Services 19,985 19,857
------------ ------------
Total revenues 31,975 29,844
------------ ------------
Costs and expenses:
Cost of license fees 460 494
Cost of services 6,290 7,674
Sales and marketing 13,106 11,557
Research and development 5,468 5,283
General and administrative 4,537 4,055
Amortization of other intangibles 237 237
In-process R&D - 900
Restructuring charges 297 -
------------ ------------
Total costs and expenses 30,395 30,200
------------ ------------
Income (loss) from operations 1,580 (356)
Interest and other income, net 752 335
------------ ------------
Income (loss) before income taxes 2,332 (21)
Provision for income taxes 936 449
------------ ------------
Net income (loss) $ 1,396 $ (470)
============ ============
Basic net income (loss) per share $ 0.02 $ (0.01)
============ ============
Shares used in basic per share calculation 60,798 60,183
============ ============
Diluted net income (loss) per share $ 0.02 $ (0.01)
============ ============
Shares used in diluted per share
calculation 68,389 60,183
============ ============
ACTUATE CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31, (a)
----------------------- ---------
2007 2006 Notes
----------- ---------- ---------
GAAP income (loss) before income
taxes 2,332 (21)
Non-GAAP adjustments:
Amortization of purchased
technology 143 165 (b)
Amortization of other
intangibles 237 237 (c)
Stock compensation expense under
FAS123R 1,897 1,553 (d)
In-process R&D - 900 (e)
Restructuring charges 297 - (f)
----------- ----------
Non-GAAP income before income taxes 4,906 2,834
Non-GAAP tax provision 1,472 850 (g)
----------- ----------
Non-GAAP net income 3,434 1,984
=========== ==========
Basic non-GAAP net income per share $ 0.06 $ 0.03
=========== ==========
Shares used in basic per share
calculation 60,798 60,183 (h)
=========== ==========
Diluted non-GAAP net income per
share $ 0.05 $ 0.03
=========== ==========
Shares used in diluted per share
calculation 69,181 66,542 (h)
=========== ==========
(a) This table contains financial measures that are not calculated in
accordance with U.S. generally accepted accounting principles (GAAP).
Such measures are intended to serve as a supplement to the GAAP
results presented elsewhere in this press release, and should not be
considered in isolation or as a substitute for such GAAP results. See
the section entitled Discussion of Non-GAAP Financial Measures in
this press release for additional information regarding: the manner
in which management uses these non-GAAP financial measures; the
economic substance behind management's decision to use such measures;
the material limitations associated with use of these non-GAAP
financial measures as compared to the use of the most directly
comparable GAAP financial measure; the manner in which management
compensates for these limitations when using these non-GAAP financial
measures; and the substantive reasons why management believes these
non-GAAP financial measures provide useful information to investors.
(b) Amortization of purchased technology acquired in the
Performancesoft and Nimble acquisition transactions in January of
fiscal year 2006, and July of fiscal year 2003, respectively.
Purchased technology is amortized over the estimated life of the
underlying asset.
(c) Amortization of other intangibles includes identifiable intangible
assets including trade names, employment agreements and customer
relationships acquired through various acquisition transactions.
Other identified intangibles are amortized over the estimated
remaining life of the underlying intangibles.
(d) Prior to January 1, 2006, Actuate accounted for stock compensation
under Accounting Principles Board, Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"). In accordance with APB 25,
Actuate historically used the intrinsic value method to account for
stock compensation expense. As of January 1, 2006 Actuate accounts
for stock compensation expense under the fair value method. Actuate
adopted the modified prospective transition method, results for prior
periods have not been restated under the fair value method for GAAP
purposes. Actuate is presenting a non-GAAP adjusted net income per
diluted share financial measure which excludes stock based
compensation expense for all periods presented. For the three months
ended March 31, 2007, stock-based expense included approximately
$209, $589, $326, and $773, related to cost of services, sales and
marketing expense, research and development expense and general and
administrative expense, respectively.
(e) We review our acquisitions to determine if there are any
intangible assets relating to purchased in-process research and
development. Projects that have not achieved technological
feasibility and have no alternative future use are valued at fair
market value using a discounted cash flow analysis and are expensed
in the statement of operations on the date of acquisition.
(f) These costs were directly related to the consolidation of our U.K.
offices and consisted of early termination of facility leases.
(g) Income tax expense is adjusted by the amount of additional expense
or benefit that we would accrue if we used non-GAAP results instead
of GAAP results in the calculation of our tax liability, taking into
consideration the company's long-term tax structure. The Company uses
a normalized effective tax rate of 30%. This item is excluded because
the rate remains subject to change based on several factors,
including variations over time in the geographic business mix and
statutory tax rates.
(h) Shares used in calculating basic and diluted earnings per share
have been adjusted to reflect what the share amounts would have been
if they were calculated using non-GAAP results.
ACTUATE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
March 31,
---------------------------
2007 2006
---------------------------
Operating activities
Net income (loss) $ 1,396 $ (470)
Adjustments to reconcile net (loss)
income to net cash from operating
activities:
Stock compensation expense 1,897 1,553
Amortization of other intangibles 489 459
Depreciation 550 463
Purchased in-process research &
development - 900
Net operating loss utilizations
associated with prior acquisitions 7 189
Restructuring charges 297 -
Changes in operating assets and
liabilities:
Accounts receivable 8,974 6,077
Other current assets 422 283
Accounts payable (507) (1,440)
Accrued compensation (1,595) (1,726)
Other accrued liabilities (272) (455)
Deferred tax assets (1,570) 164
Deferred tax liabilities 1,565 -
Income taxes payable 26 7
Deferred rent liabilities (23) (39)
Restructuring liabilities (823) (624)
Deferred revenue 1,061 (625)
---------------------------
Net cash provided by operating activities 11,894 4,716
---------------------------
Investing activities
Purchases of property and
equipment (172) (178)
Proceeds from maturity of short-
term investments 11,124 21,622
Purchases of short-term
investments (16,108) (8,400)
Purchases of minority shares of
Actuate Japan - (354)
Acquisition of Performancesoft,
Inc, net of cash acquired - (15,320)
Net change in other assets (9) (999)
---------------------------
Net cash used in investing activities (5,165) (3,629)
---------------------------
Financing activities
Tax benefit from exercise of stock
options 492 84
Proceeds from issuance of common
stock 1,193 831
Stock repurchases (4,552) (989)
---------------------------
Net cash used in financing activities (2,867) (74)
---------------------------
Net increase in cash and cash equivalents 3,862 1,013
Effect of exchange rate on cash 93 6
Cash and cash equivalents at the beginning
of the period 31,113 12,490
---------------------------
Cash and cash equivalents at the end of
the period $ 35,068 $ 13,509
===========================
CONTACT: Actuate Corporation
Keren Ackerman, 650-837-4545
kackerman@actuate.com