AVID - Earnings call transcript Q3 2017

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Operator

Good day and welcome to the Avid Third Quarter 2017 Earnings Release Call. Today’s conference is being recorded. And at this time, I’d like to turn the conference over to Dean Ridlon, Head of Investor Relations. Please go ahead.

Dean Ridlon

Thank you, Matt. everyone. evening good And Ridlon, of Dean Avid Relations Technology. Vice am Investor President at I QX earnings to XXXX Welcome our call. Vice Financial today Avid's and Senior Chairman me and and With are CEO; Brian Louis Agle, Officer. Hernandez Jr., President Chief Avid’s On in measures both certain non-GAAP using Investor and available X-K Form webpage. today, and our are and operational Relations defined on operational we datasheet call which be both will of our metrics, supplemental financial our that accompanies These the in deck website. non-GAAP datasheet measures the our Investor to our with also supplemental the section Relations operational in call, measures GAAP this press are reconciled and available and tables on of the slide release financial I example, financial performance on the future meaning transformation. would certain and of that are statements operating to laws results progress the within statements you such as, the about this securities also expected for made considered our of like remind and call forward-looking statements

are certain or no from call and and experience as guarantees forward-looking inherently differ only materially our of our Forward-looking uncertainties not relayed on undertake actual by information date to Any speaks of performance obligation required cause expectations present except and we could to risks the update and information, law. this future uncertain, results statements to projections. historical subject this as are that

release with press Avid information, you sections it of our additional our narrative. to Statements statements, Relations forward-looking in these Technology please on We Risk a an today's Form XX-K effort or associated today helpful. key department. our hope including section supplemental with Factors Investor see added as uncertainties available of SEC, Report the For that find a Forward-Looking XXXX Forward-Looking the and presentation the discussion the of will Annual We've as of complement risks also website and the Statements well some issued

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Louis Hernandez Jr.

of while flow. key we the turn to we all revenue this Hello exceeded cash you joining X currency Slide line EBITDA bookings, with Thank of non-GAAP operational and for I'm everyone. adjusted to going adjusted you guidance, Thank presentation. Bookings our report for pleased free to guidance Dean. quarter. today. exceeded that for us I’m or guidance constant in expenses, and performed operating metrics met

Excluding the grew Greater sequentially. sequentially. PCS growth of was China, year-over-year all year-over-year the and of revenue, amortization and grew X% elimination organic. revenue impact And XX% the implied the Operational excludes and XXXX our historical X% that bookings which

customers. profitability MediaCentral enterprise flow. of this EBITDA to cloud-enabled financial on impact of free consecutive representing cash This And fourth we Underpinning sequentially. free to EBITDA the million characteristics focused only for improvement customers $XX.X Enterprise of objective of as cash the media. significantly Year-to-date, our doubled XX% was strategic cash pronounced. continue adjusted performance quarter platform by year the year, EBITDA. and and industry's flow. more that enterprise we've conversion an adjusted and from flow a generated Operationally $XX.X strengthen our increase of operational to continued than is cash, embrace are our an is last XX% adjusted continues quarter a on model achievement million from operational individual ago, the cash adjusted flow of core encouraged Our becoming of more positive

strategy. value time deals validating signed team enterprises further deal account MediaCentral The modules individual works applications This enterprise over and additional creative these successful our and large to tools are lifetime quarter management In a accounts seeing by typically cloud-enabled several we our increase we’re adoption cross of market, offering handful our bundled the of with pricing. selling the of with broad services.

growth. artists in This digital quarter by and is efforts thousands we saw more digital of and predictable revenue subscriptions taken for paid recurring hundreds model. of increased marketing our our for more press a leaner, a of very advantage driven yielding our this with aspiring and to a sales, earnings that alliance of have the possibilities which structure Facebook introductory creative it comp to remain creative first and and professionals On well converting long-term the community, based of excited is and their to demand which offering Microsoft this allows profitable connect, driving tool. paid to more sales business direct we finally, the create offerings type also meets transition have positions And about artist well share cloud relationship. with stable LinkedIn cloud us been future surge professional cloud-enabled continues a And

total going booking to reinforce from a to And revenue bookings ago. and this quarter. meaningfully to mix a continues shift Recurring into model. our contributing to this visibility were booking improved recurring quarter business fact year grew the XX% a In more is of XX%

turn in going the we Slide X. revenue fact a range I’ll quarter. visibility into of have between XX% and now of to given In XX%

driving is model. Our visibility financial and in our growth strategy

accessing of large licensed upper system tools operating to adoption value from the this the over I'm best see you media We've to while is them of licensed three year sorry step continued drive can chain. of at enterprises chart grown turn strong a this allows to pace MediaCentral wide – the users down the that you growth growth each enterprise in XX% the cost If users This representing XXX,XXX ago. this left by platform. XX,XXX

attributable creative then environment create products technologies more accommodate and the than greater visibility. growth contributing see efficiently to total model started, we were a total have new they enabled as and slide et results significant This XX% enterprise right it contractually and way model were of XX% over see the moving augmented legacy creating our increase Bottom Since individual is which financial we on year is $XXX that about are and move the for ahead just technologies bookings, a to shift the market the the is decision have strategy value enterprise The digital technologies expensive on small is and the proprietary cetera over our point XX% next revenue the into Brian account to transformation more we beginning of backlog we've LTM our are X predictable Page more our and you where of of we've million more segment. X purchases. of bookings, we of and – signed can significantly over strategy large group. bookings up higher sorry, where And bookings recurring can multi-year clients. subscribers individual. left paying enterprise our penetration us a is maintain. see to right provide believe This to In reality, enterprise these for committed bookings revenue validate go you can a in New of much little and XX% to we before This an significant to the upper the deals. increase you the recurring of million bookings like good and based these growth. total bit cloud And and combining XX% respectively. you to Slide much We for graphic, future a recurring basis. we the work subscription turn providing successful and and lifetime increasing growth more the in who momentum additional relationships. managers this half individuals complicated backlog, color bottom before I'm Bottom this of degree for phase $XXX now, in transition have several see the of can which of agreement both of thereby services the revenue turned multi-year these backlog. sell recurring customers going visibility amassed to the I’ll provides also our strategy cross on there I'm to had is can the quarter XK, we and individual,

one into chain, more from heritage models needs Viacom very This over to of services one to Japanese best can storage use their DNxIQ Composer, these we market, enterprise bundled agreement agreement agreement over them. applications the the expand a allow and that With subscribers are NEXIS Viacom the that the largest XXX at and common workflows to a deals market workstations These arrangement. – customer to services. five-year workflow, and the first Media These media pricing eager for be in well XK offering applications, X,XXX signed quarter of tools XXX XK/UHD leverage with more all point includes the long-term, in spec we reduce industry's of step price cost the are a successful that significant production more including third-party base customers global every networks, with continue that transactions value includes from expansive, world's In as our tools as most NHK uniquely value, By official Avid companies With public powerful leader our several currently with high higher a operating client of recognized reach to apps or at that with applications positioned to worldwide. MediaCentral media are fell integrated is that platform. leading ownership. NHK and designed momentum these the individual efficiently bundled of available. certified we our million systems broadcaster enterprise total get we the MediaCentral,

First of launched of We market. have of Our Composer First video product Pro over Tools ago and Media then Tools XXX,XXX low few Pro very side, The this and hundreds launch one First are for a initial the tools Composer months powerful acquisition had Media on resulted helped First artist proving and to cost we already and be premium platform, thousands download. strong. I just store. the three individuals mentioned of earlier, rates sell have these This are paid applications from conversion once has downloads. plugins to digital additional enterprise Unlike purchases sales app subscriptions fuel cloud-enabled growth the cross on which version The and along base. our subscription continued with via community, the in been

highlighted results. it Brian? that over results our to in let detailed our to more Brian review now strategy, I've a me So financial turn

Brian Agle

Louis you Thank and afternoon good everyone.

to our or with XX. guidance all pleased third adjusted range. metrics. revenue having Slide quarter adjusted free all the constant were and within our flow favorable non-GAAP guidance, We In on to turn bookings cash and Let's guidance met EBTIDA bookings, were particular, expenses, operating exceeded fell

detail. QX increased move XX% Let's to bookings were more to to and an line XX growth XXX.X this currency to and sequentially. top results Slide China quarter, happy constant see Greater million We were bottom X% excluding a discuss year-over-year basis line on in

year-over-year going China, Pro the immaterial, PCS and elimination X% was product impact into of well view the HD sequentially, and excluding a PCS revenue grew both had and XX% and have was $XXX.X our is pre-XXXX and bookings million. or percentage sequentially. of $XX.X in Non-GAAP amortization of simpler was higher were elimination year-over-year on Greater increase Tools revenue quarter of third control post-contract the and million financial amortization elimination a flat pre-XXXX product content of products revenue and PCS, million Non-GAAP sequentially. for including the implied of and this a strong revenue this impact as services as shipments year-over-year that our pre-XXXX hardware expenses were The in support quarter gross up families. results family, We related of giving the XX.X%, X% Excluding Non-GAAP for operating the console forward. the quarter XXX.X adjusted X% to impact basis. quarter margin

Harmonic, or for sequentially expenses Our expenses X% decrease million related adjusted have legal quarter charge was $XX.X related a – now decrease or foreign non-GAAP sequentially. we settled. up XX% included Operational million year-over-year to QX expense higher of with and $X.X expenses revaluation expenses X%. and the non-cash million lawsuit exchange operating $X.X $X.X to EBITDA million which related our

about the Adjusted was of the pre-XXXX revenue elimination of a adjusted adjusted the bit. impact amortization of XX%. note EBTIDA was improvement on the and in free PCS, with percentage more XXX% a Excluding adjusted We flow year-over-year. making we’re $X.X implied EBTIDA flow. talk as the progress million revenue cash free a margin up I’ll year-on-year of cash

Similar the we shared of rest Now we of have past, to bookings world China provide in quarter. the and breakout by Greater Slide XX. to what

are We with very XX% a of growth on basis. bookings year-over-year pleased

XX. Slide to Moving

million completed have top already million efficiency the on an savings allowing year. program $XX XXXX last the achieved of of we We additional $XX savings

have development facilities related We more opportunities platform, leveraging rationalization. enabling done for this alignment the and by talent

to and of sheet, on $X At total we Moving million $XX.X had million. XX, Slide $XX.X the revolver September of liquidity cash balance XX. million undrawn XXXX,

million, Our receivable accounts million QX inventory was the turn and debt of At $XX.X flat year-over-year was long-term balance with times. million. ratio an down million end $XX.X was sequentially, to $XX.X of four inventory $XXX.X

of of our total excluding well leverage committed coming pre-XXXX Total contractually amended At backlog. million recognized QX requirement came from quarterly and flat of at XXXX the for backlog and elimination our year June deferred XX% PCS backlog ratio leverage our back. $XXX QX. XXXX committed last More year-over-year were sequentially. provided contractually We grew within XX, beginning of as were server directly was outlined beginning revenue from the recognized $X.X XX, revenue with periods revenue and revenue more revenue As agreement future covenant Overall of our favorable September was has quarter. was million. in

Slide Now to XX.

orders on booked, orders mix already strong been As of which now quarter. into shipped. billed beginning been in XX% have deferred to revenue of of are remaining or revenue of invoiced quarter, includes have and but This we which and quarter the visibility had the that vary current conversion revenue is visibility the conversion those which comes I booked XX% given a backlog based between mentioned, of at XX% committed from revenue XX% bookings. are revenue volume yet which contractually not and that in The and QX bookings, can

to cash increased free $X.X Now to Adjusted million Slide flow XX. year-over-year $XXX,XXX.

their consecutive The optimization. A We million $X that positive points early by well it adjusted reflected of program are week in QX of bonus the continued provided include has cash the bonus the for QX minimum this free is met guidance, excuse flow delayed in cash note, pleased payment Jetsen’s anticipated from execution, into QX as [indiscernible]. XXXX to is QX capital guidance. October When driven the business cash we been we cash their in not Jetsen flow. while separately payment quarter was efficiency our working payout fourth and the the QX the of was as QX Therefore Please – first does increase turn few XXXX me paid XX. and QX. Slide to QX

year-over-year look cash $XX.X you year-to-date the is of dramatic. at even the free flow If adjusted million improvement more

a year. flow than restructuring and higher Consistent prior cash Slide last quarter of with XX. to over cash free XXXX the QX three In flow. due adjustment quarters, were to provided flow free we've current our cash Now higher details expected items $X.X free non-recurring million improved payment.

from lending needs items lower are XXXX. that our controls. tight balance in be with invest patterns. arise in need level more non-recurring historic Capital We capital consistent expenditure or QX QX cash as expect We to with

Slide XX. briefly I'd an Turning and like litigation the to update infringement Harmonic Jetsen. litigation patent Harmonic. We to settlement recently with discuss settled on our provide

received part from As $XX we settlement, million payments Harmonic. of totaling the

paid we of in in was million million The The XXXX received $X.X and in $X XX. two million October first balance $X.X payment on of installments XXXX.

of settlement our impact XXXX expect the financials. We majority QX to

have We are pleased this resolved to favorably litigation.

cash In to not the their Jetsen a as early its Chinese the meet although met particularly payment do the Jetsen, not I minimum QX received delivery China minimal mentioned We after holiday. until to was continues will Jetsen anticipate in annual climate due be national recent XX elections. to QX Turning challenging, commitment minimums.

Additionally, to do equity XXXX. we do not in expect investment Jetsen

is line to announce liquidity Turning cash debt Jetsen Slide pleased $XX of to compared million expensive of an is facility $XX expanded $X cash to cash, additional an equity XX, a This we less in it million and additional our additional and have source credit. investment. are liquidity, million of we with the

to requirement ASC back order XXXX. ratio amended the related our in deferred add expected revenue also in haircut adoption have XXX the to We leverage

Turning Slide XX. to

expect XXX quarter note currency an be basis million. fourth bookings to we of the as to million X.X to million million greater reported which represented For that bookings these basis and of Please quarter China to in fourth XXX be a on constant the XXX XXXX. XXX guidance exclude ranges on for bookings million

in be to to GAAP the the million. is range guiding be EBITDA $XX to are to flow QX to range expenses million range cash communicated. of free adjusted of million range operating million, for of revenue the in be Adjusted non-GAAP expected a the guidance tight annual provides in $XX $XXX a $XX $XXX and to of be range to positive million. $X guidance of We in million The million $XX million previously $X QX negative

XX. Turning are growing In our financials summary, easy decreasing. simple revenue and more operational are to expenses understand, Slide to and was now our

We put are and adjusted position generating flow, cash. And we a positive to consistently I'll profit have to closing for additional earmarks. increase Louis generate further in cash free it turn ourselves back

Louis Hernandez Jr.

you Thank Brian.

things wrap I'll Now up.

in the to talk on past You've transformation accounting our we future. higher them in added Took undertook business platform, in to me brands succeed about put heard the in the Avid growth new significance areas. applications

and codebase composition employee we're accelerate shift office And during You've flow. also scale revenues The significant. us of change about employees behind platform, positioned all heard it last taking XXXX of the between and the we've changes few and it the new patent an participate most structure, that in alike was drive system for patent,XX% flexible years. base, transformation. And significant of piece workflow individuals this customers, well pricing transformation, economic a integrated most media on experience, all and choose the to of and the navigate portfolio, technology Enterprises through MediaCentral advantage application have XXXX, cost way this dramatic is platform driver best user they digital this workflow the profitability and the solve are in that makes step our the all the now significant dramatic benefits feel in value efficient we cash it pick allowing QX the and single platform course was ideal as in of new built the revenue, there to and XX% community cloud the the built. that operating XX to location unique options end an the media of higher the With that And for and challenges clients a we for the entire offer, every deployment chain. cloud-enabled of can all thereby transformation. that to

our forward the make more For way I'm approach better, offers we cloud many, streamline model unique to possible, many new into they to a the And more they work to shifting total in expand obvious to IT in a and purchasing the growth CapEx customers for a to flexible Slide of spend, save now everything the to – visibility market set this as wallet they We X improve going and expand much cost products benefits the that and the build can ownership business services focus they with our OpEx this their very forward strategy truly and increased on as enterprises future money, of on their turn add our model. have see people operations replacing to way trusted switch as applications the from We platform – their share, applications, our efficiently and get invest a areas evolves. suite their XX is more the journey and an partner. going with new execution. on make as competitors. platforms going get strategy of initial – as

models, revenue to of value. a optimize retention the as even see platform and entry the about the more and premium stream new provide are at For recurring market. our Avid subscription predictable pricing level they excited and parts been that scalable enterprise Individuals prices opportunities has more result drive

Our artist customers of in share we the are applications app. App with expand helping subscription with wallet plug-ins and The our platform community drive and activity. also growth additional on Store can are complimentary

issues we products and distribution in MediaCentral able address XX with greater started cost operate to with our adding media by revenue customers to areas value brand and larger we’re that to products we're flexibility chain. unbelievable establishing the Avid growth. services this subscriptions, at growth model heritage enterprise Through allow heritage of to higher model and of a for able recurring services part Turning business add Slide to more be in in we've and journey and an to Building our to the to core, on driven deals participate low shifting been a significant our allow market. opportunities, a new new

which is ways arm for companies, the to which our in questions. cloud further most that Microsoft helping ask And with started are Microsoft by strong industry creative into ago working a just the the working to Our adoption. to push operator alliance at cloud. to stack is now industry line couple open with with entire I'd professionals the a we've through arm with association with just announced which move the drive represents IBC largest built, customer media months recognized accelerating like as and on exploit the and We is XX,XXX transition. the Operator? Working were important and of the way products the to this the members lead what few Avid now we initial

Operator

from At Instructions] time you. we’ll Thank a Frankel hear Steven from Dougherty. [Operator

Steven Frankel

afternoon. Jetsen. Good to like with I start

from anything renegotiate visibility revenue and and any – to what you they not you at if QX, minimum much in how guaranteed this you revenue If when the deal this was One get do of that can hit do And point? the the going appeals minimums. deal did they're you will had in the them is QX?

Louis Hernandez Jr.

of part first take I’ll Steve. that Well

in minimums of first their because lower have not they us, QX. of a creates options trouble in about And for hit the as think did did That QX. that core And possible add bonus we've which seeing. core how cash operational of payment about we're business QX both and made base if of already environment interestingly of the I that We business and we're know the shortfall shows Jetsen, it First the bunch guidance. feeling you flows million and we're the shows confident the you all they'll of enterprise in with we believe that all the $X you deals subscription. our feeling

In now we're able find with outlook working terms to and improve China Jetsen, we’ll of confident collaboratively greater improving region. them for a on for the to resolution how we're that be comfortable

Steven Frankel

right. My significant part understanding commitment of their There a was the year, big hockey in stick. that QX a first represented

this a for were shortfall material relative supposed year. the to So full where to be is they

Louis Hernandez Jr.

Steve. thanks Yes

to as on right. So Louis the contract we're minimum QX but quite the said, Ada very into that with will it a what their best hit certainly contract contractual was working relative QX evaluates to with won't also – from you’re Jetsen, that tried that be means it standpoint. do largest quarter it him them.

Steven Frankel

into And as business as you to reduce well? XXXX? expectation expectations that expect what's might this you go in Do XXXX for have your your you

Louis Hernandez Jr.

don't for play our Jetsen Greater We role we'll to the We’ll that. in have China evaluate believe will reduce what expectations region.

Steven Frankel

Okay.

Louis Hernandez Jr.

eager There still are with our on that are this that cloud providers the responded like other an you Microsoft provider competitive just that remind seeing with would very region. I was exclusive to a be bid given to RFP to enterprise side cloud we're it traction Avid the that Jetsen for in relationship their the be deal. was

Steven Frankel

is the Well you month $X move about should business, think business? X $XX What a month Okay. a ARPU this lot as we to this in talked a subscription business. a about a for Tier

Brian Agle

you glad that. asked I'm

not we and likely What have when on I per pricing will introducing ACV XXXX metrics of just For for for $XX month, see more you application. ARPU. give be revenue if MRR, And possibly per month ARR, given look those guidance the type and like averages $XX year. you And is Composer. between and series statistics you recurring we’ll a Media the can Tools around that online Pro tell we

you’re the Cloud the storage. have the to well on the which component, Store fees, purchasing or cloud-baed App additional Collaboration want you free as the you there's If as use for versions storage

to could in a our XXXX revenues, backlog And and a you anxious the get be detail you so provide of know visibility amount visibility close you likely of half the visible. than rolling numbers add per And basis. you to as share would and what on you some will with deferred that up those subscription more and expect and as want add that the more is you. when to up We we're significant

As know the enterprise bigger piece is shift. the you

lifetime important. on so those meaningfully. ACV value those And on increasing are be also average will And

so and our demonstrate it’s I from deal more strong have ARR away be on close the wasn't you able we're and we was type share a to size and To each it’s going liked there a going that's additional why our has metric. as and prominent got in terms opportunity, more the compared And would will and Avid is moving been the an deal there, over at that to pricing this moving big have to they're both be like within spelling look our Viacom that you of If up ProTools, as relationship refer and replacing composers to to what as multiple accounts. average because in important enterprise moving that we're become a size average competitors we now deal of platform to it years statement to to ACV, be details ARPU, through those, think, with for simply the bunch to we of media to to want think, I application. Steve value – we're of going Viacom

Steven Frankel

if ASC thoughts early share couple revenue on is on of some might a ASC balance? deferred you And large what amount given the sheet, XXX mentioned to balance us I of XXX you Okay. wonder and the have that the times deferred you with revenue to likely do

Brian Agle

cutted may deferred estimate revenue disclose into loss or be did $XXX,XXX Steve it the as be of moved effective deferred $XX XX-A hair million of we recall that in that said $XXX,XXX balance. We JanuaryX. will our So XXX our ASC we XXXX you as would revenue

$XXX,XXX, of that Of will the million. we course when $XX be get it north

we we’ll but we that's deferred will what data But historical have have this that a amount to footnotes, point at So the relative next folds next water again we have disclose $XXX,XXX. our given call call, on of provided something tremendous revenue is. in detail,

Steven Frankel

Okay. your adjusted to you guidance me QX cash for And could in flow free GAAP? bridge

Brian Agle

to be be, there nonrecurring – will again, so $X.X closer I So going the I be delta think, similar to will million. the it's would about very where

Steven Frankel

Okay. million nonrecurring There’s $X.X guidance. your in

Brian Agle

right. That’s

Steven Frankel

And Okay. a from was on paying QX budget flush year comment the do you've do end as seen you past QX? little linearity. in then a in American and some years. on North And broadcasters the bit What like how anticipate you linearity expect maybe

Brian Agle

That's good question. a

like with that So on we standing some feel were XX% linearity, foundation XX%. to again we solid on very

Louis Hernandez Jr.

I because referring guess you bookings. I terms was of guy Yes the and booking. good visibility, deferred obviously have in but you to of revenue revenue have

Brian Agle

Yes thanks for the clarification.

is quarter to our We'd guidance I we're bullish historical in know of we and end America we strong as budget you bookings and in North forecast what the bookings mentioned so is great for flush. hopeful look say certainly our now the also broadcasters And like right pipeline. can feel to again. have that trends see visibility that a think bookings have this on on you but we the general our you we're and based that certainly I more the at that at business like So quarter, as bookings

Louis Hernandez Jr.

cycle. have would that’s that slight the Steve a sales occur to I say is enterprise these starting deals larger change longer

last before a that transition qualified will will type move that had five true to enterprise the into been aligned deal. to and will the our reliant deals typically couple case through to and budget close signing with opposed been QX deals we get for up approved. to highlighted probably each a enterprise and cycles have When type scheduled is that a going we go pipeline different multimillion through a they deals quarters you scoping, So includes deal that instance of forecast million of working on a the the in plus have approval process enterprise a be quarter are usually dollar which it's for that close, you're which as for because come we're we've few in

flush So clients enterprise more will solution, our buying it's point are see we a less but the of still deals. likely – budget

the close type pricing of because enterprise out end tied are longer And delivery. the less to predicting tied where the tied is we're sales they deals at to the and kind usually to delivery So discounts get the of the to effort, a much rush requires of that strategic to environment quarter more close. more

fairly your software people one in certain significant the in would words they deliver, deliver you of that requires amount because a off have lead. it's to like old we if we other is a of we true sure had make aside and enterprise project plug in qualified not some composers close we quarter to and days amount to your kick qualify of them So in work have media piece where QX integration. in to because a to budget, QX, we set This

at be more in is cycle, that to this sales solutions going more developing towards are think, I the way the any that end I for capital would we us And will that because still been quarter predictable point expect do flush There and that that the end year. we’ve take advantage purchased of of excess it the So collaboratively, happen. the occurs of

a people doing is of the get for of there NEXIS some kind and their some quickly very to have a well at of with along solutions us. point a We seeing XK hands like our lot microburst tech those new of where on want NEXIS, on pretty graphics or AR we're

Steven Frankel

you. let some questions. somebody thank ask I’ll else Great

Louis Hernandez Jr.

Thanks Steve.

Operator

time with this move along we’ll Galinko to Matt Sidoti. At

Matt Galinko

Hey good what in do afternoon in you looking guys XXXX? Can the like on the congrats where quarter. recurring opine on bookings bookings or you see recurring mix see you

Brian Agle

trend that Yes, you've provided you think, continue. I don't I The do we're really line so dramatic. We haven’t seen, but anything trends. as we we looking think consistent the Matt trends haven't on XXXX, that for know that see will guidance

Louis Hernandez Jr.

Steve’s us Matt close. cycle. enterprise will lengthening predict the the early to I harder you when mentioned it in it in made about deals remember question the sales And for

would in increase booking. come steady from And the also think, we not time. enterprise largely that’s sales artist but something handful where to you I with market starting have would gets digital community, would creative subscription. time, session maybe I five the them something to that to But the And I percentage other and have that I you've the one our before, in we – like to significant are every expect in it’s and people you the to of up is when number of this recurring quarter like deals for for both collaborate a mentioned would from market which the to I do you tool. the individual ten see To a a fairly become add that that artists now to change. now. public been expect some our grown XX,XXX community meet introduce tools. we you’ll have fifteen you have And visibility So notice creative a if actually using you done closing that based on meaningful first

And to is in, person over you where so downloads that's pay. interest other the with start want use then to come a proven the convert a way interact give happens it. to what free that's people to because And generate you the we you

be of free very subscribers. proving to ecosystem meet paid little tool that and you community for So other low where a the tools, acquisition cloud-based artist cost can effective is collaboration, people

to we drive bookings continue that percentage up that recurring that of in both nature. So think will are those of

Matt Galinko

Got thanks that. it, for

to I you driver think, NHK HD being Ultra flows work more expect Do in HD of enterprise of, Ultra mentioned deal. a XXXX? be part You

Brian Agle

this love second right. vendor. if six you circles this I drew a of if Yes what each and about those you from for you about to And paper really think left work your think about workflow a of another represents I and think circles piece on

you're in is asset, then, we course workflow integration drove the system, a the contract production why MAM a between those need fairly on and all think with And really is especially having a applications. broadcasters and coming get XK-enabled mixing platform your developed them about your But it’s So do before suite, be this your I all have to and which which have your who it won about NHK, to siting nice with are their to because we XK go what piece, thing rights can XK, we you're NHK we think, use which think externally to vendor going editorial have suite to Avid going ones road. you Tokyo first NHK, going going your deal play I The the significant a out. probably instead the And because the one leader of down vendor precursor that's was common to each licensing they're to to ready Olympics as developed XK XK. is at least internally provider. all leads of the all requirement. systems to They be know have they

in drive NHK. new deals. enterprise XK acceleration are to buying microburst to this way application decision think, the nice see it we cause so about those And behavior, I it going a see the thing they somebody like that place like when have, option have good efficiently, do you you more an we're can where for a And for very when is you

Cloud, a system we many we up XK a because and meet along get way have enterprise whole that suit. and of efficient can started the to which also short-term and there it create things deal do augmented discussion new of to graphics we decisions this people with lot underneath virtual need, is applications contract surging in a reality those say So in can operating with mind thing. your a top ended large but XK we on editorial we're and want more like across hoping in It the this

Matt Galinko

Got thank you. alright, it,

Brian Agle

Thanks Matt.

Louis Hernandez Jr.

Matt. you Thank

Operator

Will Khorsand to now move BWS with Hamed Financials.

Hamed Khorsand

a questions just here. Hi few

details to benefits the any far partnership? can off, from what Microsoft First the you as provide if have some so been

Louis Hernandez Jr.

again. did RFP. as Thanks – the Sure Hamed this is you Louis an for remember calling. we

So I Microsoft preferred we mean [ph] all of open bid, the as well. formally Chinese from the it’s providers selected we Ali and had we major as and Huawei Remember interest – our Ultimately the most select vendor. vendors system. an

certified be AWS already through team we Google. ASW will probably had move the is capabilities, Kenceng like vendors centers data public Google commitment fine priced they than also The cloud strong largest reason and did of than including in and features. a that their all and and attributes has but had eventually, they had overall as Huawei both Microsoft pricing in to very we some had already the private out the So had largest know hybrid. terms very cloud larger they model. you selected to entertainment. media And was from and and path They a And the

today, you of a security extend cost. way appeal instead by on of most providers public, the it it the of And at your your right running for of force week on you when commenced then sizes, the applications muddied right of packet the cloud look security which Azure total which most basis and on will the cetera. through directory to you to licenses just assets, like for media ActiveX to thought play flipping cost that you're to you component So Services, can start our concerns and our the but ready. a you're running ownership total pure do, run large include enterprises et you're means top over had top is already reducing to a Microsoft cloud then from environment, migrate Microsoft

either time to forced the cloud to forgo and like stack over And opposed we move large when add another have were questions. media enterprises of a being public better they very pure to through position service a ready [ph] to help they're so felt BM bunch in play as

massive. if about Avid to And almost XXX right of the Internet is you storage the half is this through now so streaming. has think just everybody was interesting it's NetFlix volume, reason Now on-prem, terabytes total

cloud guys total in And the in production Nexus into to cloud our increase enterprises, to with Avid for future. other that were reflected of very are of cloud assets Ao nature responded very, footprint got and the dramatically large volume. is would of get of excited. of you form those moving to and start development very move training efforts, you where If and the the our revenue was And large clients that the excitement production piece if the proof-of-concept huge. has their it because that we'll a dollars aggressiveness subsidy media a products RFP integrating our very, the investment in degree Microsoft platform, of Azure the that

and they we the aggressive were we attractive had they They so felt And were the clients. economically most for most flexibility operationally. felt most our the

and Microsoft us offered. Levenhagen their and they’ve great [indiscernible] been Scott accelerate so And who to Bob, been what Guthrie that's been wonderful far anxious they've help this partners involved. almost Azure M&A runs there, So has effort.

couldn’t say So about of been. type positive more that I the partners they've

Hamed Khorsand

Viacom the was switching given a they their do Okay. And licenses full add much added gears basis. quarter, bring group on employes in r to then using how of since you on, they of weren’t

Louis Hernandez Jr.

Yes interesting that's thing. the

discussion few station you examples, who you all went spend two standardized So tried on station all step to buy add applications. up let And have Sinclair, then me give to new and pay more they we with top groups they pricing. on somebody a every their efficiently. are quick And and more and you us have said time tables to group, down do basically these Avid a

is model normally The face. Sinclair that’s model. more Viacom what So like the we

mandate So but each of they individual cost, a wants to don't they property, want their to down set. force that want you team there to drive a have don't tool common

So have they them applications. into they us and on what the then and us to convince is go liked buy groups can of each the more want to everybody platform about they

discussion is interesting a to but media them of that can time. big about use. kind with run one The to Adobe concurrently which one was them this shop Adobe them, a it over become was stunning that for composer religious not thing shock have Now fact to [indiscernible] they have allowed

a If important to you you The can is got MAM the Composer continue conversations. happened allowed can everything to use and Adobe, have Media door that Now you we and storage but Adobe. us, have happy that concurrently. can suite. to work your this total like once and the percentage system it’s you don't to your us the it’s don't we interesting bigger of in archive replace else to you That small us have get

and presentation plan don't “corporate” of us them Media allowed available the it. I So editorial large and Media and MediaCentral standalone purchased go that group to group first was expanding what last well the going on to and and internally to they’re convince one not to your our groups – have basically, footprint the to were that allowing groups each actually week the Composer. you And just applications starting to received by stick of that don't of for to groups. it with and replace very you us went into they I are to we're the making Central standardize licenses we and think is relationship. groups And individual explained has the to they suite expand want our

like the That's So have, are footprint working Viacom to I really into pressure how we these of depends dictating is are the much a over And how which evolve way working. with companies these it on think different. culture or it us economic each works the and common it's time. dictates

we're really what dollar, a the this can would I help and as in small I does long-term. really think of of case multi-year multimillion beginning consider agreement about Viacom, this possible. mean We them what’s excited

Hamed Khorsand

and case the if the before next long of will flow cash flow? that's it take recognition So in recognized how free the cash QX

Louis Hernandez Jr.

about Are as specifically you a Viacom, example. talking

Hamed Khorsand

Yes.

Brian Agle

I think not was so multi-year it deal. reflected. Yes, in QX And that's a

Hamed Khorsand

Okay. you. Thank me. it that's from Alright,

Brian Agle

you. Thank

Operator

from Steven with Dougherty. Now we’ll take a Frankel follow-up

Steven Frankel

Yes In to agreement? have to pay higher what rate to made additional borrowing? the other a this serves did or were changes get words anything you

Brian Agle

fee. at So interest terms, same rate the a say do had we to we same onetime

we the $X queue called XXX the line the in incremental credit. think the I and $XX million between on million of at term extra it K, out

So $XXX,XXX.

Steven Frankel

to that do, do? something in Are about $XX something enough comfortable able the likely backs to bonds cash? release you're you the million you or that's buying contractually And is that you're talked that with of about parting

Brian Agle

in actually create to to our some moment in to so And bonds. ability purchase And have open a general been consider well buying flow. we'll the with as option to the good is we by watch needed the shareholders. we that But just basket right the the we've the service market do as now we conversation watch cash various encouraged up Yes to that. do news convertibles. thing, At go go and the our realized

Louis Hernandez Jr.

We to to very what think we why say in it any given that is I we'll add that's don't and way quarter. felt the this cost And we this cushion fees of on is think incremental liquidity. a and would liquidity need that we have basket. Yes low wanted

basis can we advantage would. progress evaluate as bond just we and make if take we’ll then the a we the that of ongoing So decision quarter. an through opportunistically And

Steven Frankel

Great, you. thank

Louis Hernandez Jr.

Thanks Steve.

Operator

closing we’ll And or this the conclude back time for additional turn Q&A it I’ll At to remarks. Session. management any

Louis Hernandez Jr.

We speaking you have nothing to thank And our today. forward look all further, for results. QX joining you us to we after

Operator

does your for Once conclude conference Thank participation. all call. again this today’s you

Avid Technology (AVID) 9 Nov 172017 Q3 Earnings call transcript