AVID - Earnings call transcript Q2 2021

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Operator

Good afternoon, ladies and gentlemen and welcome to the Avid Technology's Second Quarter 2021 Earnings Conference Call. Today’s call is being recorded. [Operator Instructions] Now let me turn the call over to your host for today’s call, Whit Rappole, VP of Investor Relations.

Whit Rappole

Thank you, operator. Good afternoon, everyone. joining call for June for for quarter Technology's XX, you earnings XXXX the thank us Avid today second XXXX. And period ending Corporate is and name Whit Avid's President My Rappole, Investor for Relations. Vice Development afternoon this and President; our Officer Gayron, me our Chief are With Ken and Officer Executive Financial Chief and Rosica, EVP. Jeff time Ken and remarks, detailed review a Jeff prepared overview operating their provide followed provide an questions. of our will financial for our In will business results, by and your then of release afternoon this earnings have we we slide refer a our this prepared issued We earlier will and that presentation to call. on press The of website this are limited our available replay at be will on a available on release our presentation and call website a ir.avid.com and for currently time.

certain In financial operational metrics reconciliation the contain reference measures non-GAAP of for this noted G, by release both website information in are otherwise is figures most During financial all the accordance GAAP to always Regulation and this closely today's metrics. revenue, the noted, for our this earnings presentation a the appendix during presentation. GAAP. today management also the and with Investor call, our will and except on used non-GAAP non-GAAP management call call to which metrics Unless operational and figures, definitions associated

statements Act XXXX. of contain In forward-looking the Reform Litigation statements made presentation certain during today's of addition, Securities within the Private meaning

slide the from or or pertain answers results and may that forward-looking outcomes. differ accompanying as comments to statements Our deck may materially future well that this your occurrences Actual on results forward-looking statements. as include questions future to and these are call

quarterly Rosica, associated CEO these recent let issued and the see statements, that, for our with including key forward-looking and on information, to reports a most some our more discussion on President, Form press call risks filed remarks. and and over With the Report our XX-Q XX-K turn Jeff of SEC. uncertainties me with Form For the release Annual today his please of

Jeff Rosica

And thanks everyone joining to us Avid’s for to Whit. review results. Thanks, second quarter

progress and in quarter items. cash we other have our EBITDA confident free cash continued all pleased point, growth and this full as for year-over-year and sequential growth the outlook this At we our XXXX revenue guidance remain saw raised We’re we flow. flow with in and guidance revenue, full year earnings, free year XXXX XXXX adjusted strong reaffirmed

Now share with there's all you want a lot to today. of we

So let's get started.

the our second have we would During are the review first like to quarter, with subscription I continue business. that in growth year-over-year main you three takeaways to robust

first we late flow. and integrated seen recovery the profitability the continue business to we earlier These the gave healthy XXXX free to our gradual factors in solutions us year during deliver of since second XXXX cash have our and And Second, XXXX a half full to helped in achieve confidence year. quarter. this accelerated ability third, deliver us we that guidance give strong

more Now provide these let of a each additional on specifics dig in me areas. some bit three and

adoption of business, our solid strong enterprise offerings. software tools, saw in our sustained, overall as year-over-year, we subscriptions robust tools overall grew growth First, new customers including great and Subscriptions for year-over-year see. is continue both XX.X% individuals based their models, our performance business our subscription Cloud embrace across to which creative subscription continued enterprise continue the to strong trajectory. and creative a growth

and our certain Demand growth months drive invest to these home of customers work initial restrictions. adapted during marketing start to COVID creative we creative purchases of the and as As in stayed past, the anniversary of to and tools for pandemic. continue many And in sustained the remain we saw strong growing products increased remote of and tools. the innovate

Enterprise management is generally increasingly several saw annual releases the getting enterprise one quarter, During solutions, of Marquee use We most well as of average quarter. price so see added to enterprises our offerings. as and with enterprise customers configuration, we're our the media especially multiples during subscription subscription creative MediaCentral of subscriptions are of their on growth centralize seat global the recent of of license our the organizations price with MediaCentral The we encouraging We is depending second annual new on that started this software. just central ensure to adoption the strong customers. second subscription the licensing

our from offering the addition, In and other saw and SaaS based strong. pipeline our increase Demand sales adopt for solutions we cloud Avid products On remains contribution Edit these

impacts strengthen. COVID, driven The integrated was since by have second last product many from and year-over-year third the in the recovery of Next seen sequential quarter which solutions business the strength we quarter, areas. recovery our the really during year, in

more saw storage customers increase resume to on-premise environments. normal investing of Our business in returned their purchases schedules an capacity hardware in distributed updates production by work their levels, as to they and the technology to latest support gradually and

sound parts the increase many touring live return due a solutions up saw of and restrictions certain also in of in as the festivals loosened We strong have world. music activities, to

not pre-pandemic than start since quarter sound the While the to live any back of levels, they're pandemic. in still higher revenues were

solutions gross And Our particularly storage, overall. interfaces year-over-year significantly second integrated Revenue quarter, also a we cash ongoing other the put the nearly profitability. during margin the place during in structure revenue we benefits to flow. efficiency and control free continued including the and profitability improvements drove with revenue and deliver quarterly growth third, from audio resulting for our improvement services improved recovery driven year-over-year that solutions realized audio Recovering year, programs integrated in innovations combined also markets, last higher by new a strong continued second healthy cost solutions grow We integrates contributed of our the to operational to product the Growth volumes, nicely. and in in delivered we've growth. margin periods, quarter XX% recent

in continue our QX and temporary year-over-year QX to our business, in at non-GAAP XXXX, increase EBITDA manage Now increase saving resulting in look adjusted to in during we EPS. smarter while ways we remained measures cost have diligent these and a year-over-year as certain controls of were XXX% spending

free cash Additionally, flow a cash we've flow strong free quarter. delivered what is weaker typically and positive

Now bit let about prepared perspective. things forward by see business going a end we where my me a talking from remarks

the from expecting to to COVID through see XXXX. are gradual continue globally half recovery We second the of

or to However, recovery cautious be integrated due in we do as factors. remain the uneven COVID, impact a Delta other solutions of could the variant

solid product We growth innovations. continue driven individual by new on subscriptions offerings expect a creative trajectory and to

world software desktop, to and Sibelius the across laptop integrates both. their or work to subscription iOS mobile permits continue week. solutions, We device, including mobile, deliver Sibelius of which on and we users for fully notation late experience the last new announced one their music

software releases become across we service. subscription notable and Dolby releases, Pro adding our to Avid larger enterprise our strengthen recent overall The Tools subscription now publish of continues Media many and Music and customers also by will rich expect feature expanded driven deployments music to Our around a creative of of Composer the enterprise largely business, Atmos our the but our tools part tracks play from to capability MediaCentral, include new from Apple globe.

we Demand, to add which Edit end expect the expect our quarter. the in about and usage of new getting As offerings, introduced of we to customers subscription continued of we the benefits and continue cloud And robust solutions, On educate was expand customers success including growth. adopt to at our see first continued their innovations

Finally, on efficiency we've months. we maintain continue focused and our the XX that efforts cost the been to improve discipline past so for

innovations new certain us product have to We in our spending increase products, reduced legacy on spending cloud areas. and on allowing growing subscription our

business. generating to investments as as combined and we believe us and forward features new transformation, XXXX move we making products SaaS strong various for made to have our addition, recently scale, In have we quarters subscription beyond. previously, the and certain with our the improvements enable introduced the profitability support more several past and improved free cash to we're flow infrastructure discussed through during profitably growth improvements we us well We and further operational digital position while

financial Ken more that, turn call details. with now to me So over review of let to the the

away, it take Ken. So

Ken Gayron

everyone. good And Jeff. you, Thank afternoon,

We with results of the business quarter for and are our XXXX. pleased financial second

growth integrated recovery and strong subscription Our delivered cost flow. in and with efficient our year-over-year cash our revenue structure driven profits creative our together free a by continued business strong growth in solutions and enterprise

Our the non-recurring XXXX improve and the will of of portions remainder subscription our focus be business to to for revenue to integrated related continue the building solutions.

second We of our flow second in higher expect financial these improvement our XXXX. the in free of in With of cash continued half key efforts details result turn that, to including to the profitability, metrics, results. financial and let's quarter levels

encouraged by paid reached which our subscriptions. of are the base, continued a in high new growth subscription We

licenses, sold and X,XXX for In total now have year-over-year. XX,XXX had subscriptions, the is of of XXX,XXX first subscriptions. of for end subscriptions quarter X,XXX our net at first the approximately We added the as Our has solutions, MediaCentral, growth. net MediaCentral which of new XXXX. At subscriptions the quarter, enterprise reporting, stage fourth total as to quarter of started new subscription quarter This quarter we our subscription creative the we XX,XXX. MediaCentral seats seat second as are offering our MediaCentral our count expect subscriptions chart count reached for we an net the subscriptions drive we material number subscriptions approximately in MediaCentral include as second increase count XX.X% of subscription software and end our fourth during subscriptions. roughly the quarter, new including that subscriptions count. we including XXXX. reached in second number. to a the the included of the And In next quarter, are revised a MediaCentral are well solution, the the these

the Pro year-over-year, in Media forward. of of grow upfront year-over our for creative Composer continue now up up -year. continue XX% to our MediaCentral and tools, nicely and XX% a our XXX% XX% will ago. Tools up increasing Subscription XX% from include Sebelius year-over-year tools strong We creative subscriptions represents Annual all with going were subscriptions year XX% count growth to subscriptions up paid total for year-over-year,

mentioned, are of annual our year seats subscriptions solutions. as at MediaCentral of is subscriptions one And Jeff multiples the addition, price In price generally average creative annual MediaCentral least of the of duration. one

year-over-year to growing for an driving to and opportunity. new and revenue. to the The new growth revenue continued are continued believe number additional Now of in paid demand and this tools, of and We offerings more we second for as XX.X% our of MediaCentral large in creative during composition the subscription spend healthy $XX.X subscriptions enterprise for our quarter, as subscription creative capture a million, will increase year-over-year. growth subscriptions marketing continue drove as well our be subscriptions reaching moving growing market innovation

first our XXXX earnings during call. mentioned As quarter

existing their and licenses first perpetual traditional contracts The from fourth given the to cycles, maintenance calendar contracts opportunity natural number for enterprise largest convert provide budget around agreements, the that existing subscription enterprise and quarters with us year-end. the maintenance of customers renew to

and as enterprise subscription year-over-year improving growth to this by models. lag from remained we on strong during growth expect sales the million the stronger quarter, second quarters. revenue the to offset from subscription XXXX fourth contribution quarters, of maintenance maintenance revenue rates quarter renewal recent X% Overall, exceed stable customers was revenue in year-over-year first in growth result and more saw subscription first to software expect our Maintenance periods. in in seasonal the sequentially. we half our a as to As year-over-year certain subscription in $XX.X up product and down Maintenance to and continue contracts transition pattern, and contracts year total customers the move growth of throughout the for see revenue to of subscription our year-over-year revenue third the enterprise second X.X% we total subscription growth subscriptions of each

provide forward, in should improving rate we maintenance integrated revenue our moving we're and renewal related Looking hardware maintenance which growth the contracts stability for solutions, to an forward. seeing trend of expect

the recover million maintenance getting strategic revenue XX.X% to As overall the subscription and year-over-year growth business is from perpetual revenue. track our license in to year-over-year closer the have increased -- licenses by slight subscription by we Total as the should more maintenance second subscription in second the diluted growth revenue, revenue, in and revenue Perpetual solutions quarter, growth subscription revenue revenue a by combined focused was maintenance combined market. as subscription $X.X going continues year-over-year integrated with closely perpetual subscription slightly revenue the XX% maintenance decline on was deemphasized increased quarter. quarter, revenue subscription Total and forward. in down software subscription license XX.X% as second and

from year-over-year last year, the XX.X% of million XX.X% off increase quarter, business an the second products from and quarter an Our sequentially revenue up Live was integrated solutions recovery product to our increase in COVID. enterprise continue year-over-year strong continue also due $XX.X customers the make both to recover was solutions Within market as due revenue of a integrated recovery. was low solutions up to sequentially. continued storage sharply of revenue sequentially significantly pandemic. year-over-year and our sound in the second in Integrated to

many live the revenue quarter. for also by sales of year-over-year to the sound Pro resumed. capacity. year-over-year, of The As in control and increased add of revenue Tools our quarter, acts carbon fourth quarter audio was expectations hardware second surfaces festivals new introduced touring XXXX. increased studios as many driven larger the began ahead during Audio Pro interface Tools nicely recovery

remains and we from lines $X.X from pre-pandemic second and professional revenue levels. of the learning our year-over-year down solutions businesses, Finally XX% services and an the The video of have balance revenue deemphasize comes servers revenue professional in were our year-over-year. was solutions million quarter product certain these revenues below these graphic of services as improvement

benefited year our in Now XX% up increase LTM from total of Annual subscription lower $XXX.X revenue recurring growth channel strong long-term strategic sequentially from partners. ACV agreements XX.X% and end contribution moving year-over-year in contract impact revenue purchasing improvement the the In higher revenue in contracts of and our last revenue ACV up before. second have of months. due million of revenue in contract value. recurring at the down was annual quarter was with as maintenance first product the from subscription XXXX. subscription in XX% end, QX, revenue XX percentage during discussed value greater to year-over-year. quarter the the due enterprise and services revenue to QX recurring calendar and The we LTM with professional agreements was associated renewed XXXX sales from the the non-recurring from of around revenue that

added we up During purchasing were strategic the renewed second successfully agreement, five all quarter, one renewal. that strategic we personnel agreements new for

and in cost related to professional in employee up the to $X.X to during strategic true $XXX,XXX accrual expenses at XXXX XX.X% a would At put for to a mix in revenue events look our an $XX quarter Non-GAAP revenue included increase. creative million, increase basis an quarter non-GAAP a initiatives the constant XX.X% rest savings sequential Non-GAAP second software commitment. financial license were the two million the from Absent us of greater XXX the was quarter $XX.X the the year-over-year. increase integrated Operating operating our Total let solutions XX% expenses second significant year-over-year temporary been year-over-year, increased over quarter. quarter. in those margin items, second the currency, solutions, second was year-over-year. well Now, costs temporary and quarter, of margin results slight Revenue XX.X% have services including a place non-recurring XXXX to related quarter, million for COVID due of as for royalty sales points as non-one-time gross furloughs. down due $XXX,XXX gross our

the from second the year-over-year million $XX.X results gross subscribers effect, have income up paid our to second the While non-GAAP of of we $XXX Free XX.X% share the $X.XX due expenses quarter. are million the the an exercise quarter, interest more or cost the was Non-GAAP saving to profit margin second quarter, many XX.X% structure. expense. for and in continue the no second $X.X Adjusted was flow in second in temporary as net discipline $X.XX revenue. for higher $XX.X year-over-year Overall, expense increase quarter we to in was on trends, EBITDA income efforts managing favorable we the and million in quarter in was remain the in improved year cash up operating capital improvement Reflecting XXXX. per to in subscriptions. upfront from increasing continued XXXX. target similar working move operating million annual EBITDA in fiscal million to Adjusted $X.X reduction of approximately for longer operating

the in the was XXXX the cash million quarter. $X.X paid of cash use a of capital second quarter. We also bonus Working million during the in of last employee $X.X

to expenditures Avid’s to business more subscriptions. $X software moves continuing million during improvement and upfront capital are see We our down second were annual paid as XXXX. working cycle quarter second the in Capital from the quarter of slightly

half As support by several we of will previously second expanding dollars have capital that mentioned, we in during we subscription internal increase operations as XXXX, to expenditures business. be the prepaid expenses and our investing will expect million

XX, cash to in Now million decreased Accounts turn operational of hardware levels. remains due to $XXX strengthen $XX quarter in strong we decreased end increased and the The to increased to balance reductions improvements year-over-year million sheet while to million inventory the to receivable our down. solutions June continued million. debt balance inventory year-over-year the $X.X balance million in let strong operate following billings. was drove EBITDA provide leverage sheet. with shipments debt at $X.X increase to increased at support the quarter. as Total us growth metrics, our in forecasting value business turn of the in integrated payable period. refinancing DPO of due end we first our allocation times flow the the prior million free quarter Overall, in at long-term the year-over-year growth sheet end our an continue $X.X and business in at completed $XXX.X to improve second the cash explore capital as Accounts company adjusted Net year and the in efficiencies Net outlined X.X times second the continues into to X.X health of adjusted the our more Investor as from debt the credit with this grow at quarter its are year. the of and Day balance all of alternatives second total earlier to net long-term A shareholder flexibility pleased in and the drive quarter. to to debt down to we reductions EBITDA that

our us and XXXX. full XXXX. are first reaffirming now of the markets, rest full the Let given guidance year cash turn in half the favorable free end for guidance, recovery flow our raising are In we the to we for performance XXXX in our of year guidance

third follows. providing quarter guidance as also are We XXXX

the for million guidance revenue of total revenue at range is Our quarter a represents midpoint. year-over-year growth which X% $XXX $XX million, XXXX to third of the

Our XXXX for of third $XX subscription and maintenance guidance quarter revenue to the million. $XX is million

Our income to guidance non-GAAP the $X.XX, assuming and XXXX for share quarter is outstanding. XX.Xmillion per third shares of $X.XX

guidance for XXXX EBITDA of million, million share $XX range end EBITDA the will at and $XX.X midpoint. year revenue, maintenance quarter of on adjusted in is subscription the Our LTM net EBITDA third to the We of was that third for result reaffirm X, XXXX. May $XX income million non-GAAP the at revenue quarter guidance a issued adjusted full our XXXX and per that adjusted

XXXX $XXX guidance $XXX total for revenue to Our million. remains million

subscription $XXX remains XXXX million to for million. $XXX and revenue Our guidance maintenance

adjusted non-GAAP remains guidance XXXX $X.XX for million, guidance share XXXX. per $X.XX EBITDA our Our to per remains and share $XX for million income net to $XX

$XX raising to Whit. flow I'd as million our With XXXX like guidance first We gives free free call free confidence us for XXXX turn year cash in in $XX the are flow. trajectory to our to half back performance our to that million flow our cash full cash

Whit Rappole

Jeff. your ahead. you, our thank prepared remarks. we go take And happy And to Operator now concludes please Ken. That are questions. you, Thank

Operator

of And Instructions] to you. Thank Riley will Nichols first [Operator Josh B. go Financials. we

Josh Nichols

that see strong a great do some business on of I'm thanks how back breakout next? is or kind the expect you sales my you of currently over that could and seeing, just here. into half elaborate subscription that that's from year question guess quarters grow for transaction trying sustainable? a taking I subscription think for enterprise may quickly you're and bit pace Or of revenue to reference with Yes, little to to MediaCentral over two just and would you the of this accelerate? the get frame

Jeff Rosica

Yes thanks.

think I appreciate you've call. So the it's a good been the on question,

we I I we're are you opportunity think over be convert think opportunity early I them stronger still as and continuous very So QX to always the the really some Ken opportunity continue in to what that the seeing -- of Ken But process, said, enterprise are early But where this that's the to commented, customers. to customers -- QX to biggest said, a subscription quarter-by-quarter going because pretty in think convert enterprise are. move we're as over. enterprise quarters,

I there's going lot each we there's wouldn't year-by-year, ahead of that at a I to from think, look quarter. very a of what positive trend to So momentum see see when continuing. you possible. I lot of of to say us, enterprise conversion subscription want opportunity think And a I we're going But be customers. lot we think predict

Ken Gayron

Jeff's Josh, add to to thoughts. like I’d echo

We X,XXX our models. that have over enterprise candidates subscription enterprise subscription -- to moving for customers

Some X,XXX dozen these for customers buy very customers a only buy matures customers. years may percentage coming could there's as small in the for licenses, out, pointed that a these tremendous we've Jeff or as enterprise the model converted And a opportunity of are but And additional there dozen of seats. growth. two larger

but growth. customers move those and revenue to gross opportunity not as licensed our growth, incredible margins profitability. only that we a And drive there's So expand will

Josh Nichols

business bit to the we more, of of I data as this much to in compared about ‘XX, heard and could concerts me, growth of it kind follow how of jump things help here. solutions Thanks, positive live good levels? what return question was a that, with up guess, guess, that guess, one for a right, we've -- about integrated pandemic, points like like could Ken. little than how during you to bit, the pre-COVID return That industry little and could sustainable the And of could the lot of be we a kind business One was you're of piece that start I see think the see music. segment I a seeing frame the we

Ken Gayron

jump any we're going don't to quarter-over-quarter about we compare see are to talked markets. recovery going necessarily at what a see I but about, think continue I to talking gradual is to in are Josh, these Well, period, that pre-COVID we've to want is

to ahead from that we the customers about to see kind in is we recovery different continuing think production, think major a Now the and they're are film world, their continuing strengthened, QX. very to bigger I greenlighting perspective, the see projects the give we would we're different that companies, of definitely larger we're its as them and continuing and strong their again. more I to market the bring I'll are did back world. enterprise But full working parts but to TV media of good signals that customers, really they're production there's signals see Again, seeing on market a categories, global the I going say, around situations from production look broadcasters on continuing are three return say,

with enterprise solid to a opportunity of some to sound And seeing continuing -- good the and funnel, so a see bigger we're market. live do customers. projects we're these And the in

I we've that online. we're in starting festivals broadway back all think halls you see or or those facilities, and invest people in and fixed the or concerts things like to music also news seen shows, churches concert come who

and depending seeing around on recovery could continuing world. what that's I think we're a is think trend. again, things So be it positive, with I COVID. And seeing overall, trajectory a But lumpy, how we're unravel we're the great seeing

Josh Nichols

it. Thanks, guys. Appreciate

Ken Gayron

Josh. Thanks, Yes.

Operator

Colliers. our And from Steven next with Frankel to question we'll go

Steven Frankel

much creatives. Jeff, ad subscription breaking function is of you for another maybe a people lapsing Thanks those tool last we've smaller to created seen the and AI at opportunity. net just their is up to therefore play are while appreciate nicely, year the relatively quarters, of numbers is the and the I dynamic Good that dig And now here? there year-over-year, much that from back subscriptions wanted afternoon. number pandemic than during MediaCentral out buying or several really into how for that you're work it's

Jeff Rosica

of a yes, think things. there's couple I Well,

that got know, portfolio comp is been last quarters has as abnormal weird, we kind the a QX one forget couple strong First license. you just comparison always of a you've gross addition see I'll the But got a Don't going of see to of we to tougher calendar net But our we -- all, for across if years, to the ads, year ads really you if COVID. it remember, is of continue because say given you QX subscription to weaker due saw markets. look QX seasonality. the at and of kind COVID anomaly of seasonally also take, the even has back education and

net away And progress. again, always delivered QX get ads. quarter to and very for on so with going we're net that's ads But from the the we very, a strong happy very that

like the what look see ‘XX. towards look and second a last just the and tougher trajectory I think we market given we on it's this half is as we we where we we again, comparison -- seeing are towards year, but like the of we're what

Steven Frankel

large starts ARPU how get in lift overall the ability And it does to to to before has have MediaCentral business? the subscription

Jeff Rosica

as every new do we the going bigger benefit ad that you continue other as in and gold continue compared it's -- to bigger, math becomes think Well, a MediaCentral on I increase the can bars gets ARPU. to ARPU. positive obviously, Obviously, have the to chart, to bar going your is to

add as us, we So from enterprise that's -- perspective, customers. an it's all ARPU more upside for

Steven Frankel

QX, -- margins And that put Okay. charges the you pressure in one-off QX expect recover was to non-recurring that on the really software

Jeff Rosica

items given in company margins QX, the gross overall two track recover, that one-off gross those -- margin should margins we have the total software overall been Yes, those of should north the absent which an Yes. those would of one-offs. XX%,

our margin trajectory in work, profile in doing gross in of great lot feel margins, looking and software, confident very gross looking forward. but margin We to the also So, the a is team company. continuing terms of our optimize at at the we're about hardware, moving in

Steven Frankel

great. you. Thank Okay,

Jeff Rosica

Thanks, Steve.

Operator

next our question so, And from Chokshi. Nehal

Nehal Chokshi

almost you, subscription up subscription thank raise quarter? that's guidance maintenance point for Yes, embedded cash grow in But anybody’s though great. another quarter and cash guidance robust also excess strong flow that congrats Was that free in free XX% expectations your is two on plus that of this, book. year-over-year yet the will that’s flow, year-over-year, XX%?

Jeff Rosica

second would business Nehal, to when our moving to very last we And positively. so perform see a very trajectory I expect subscription forward well. at continues have that, subscription Yes, we say guidance we’ve to plus maintenance plus raised continue strong the we maintenance, look quarter half.

very guidance higher for confident we're maintenance the the subscription in So achieving and year.

Nehal Chokshi

just lot then just real in has [Q-o-Q] here, can for over the [obviously] everybody But addressed could Avid the accounting and declines And with that been that of believe familiar a understood. to revenue, past. investors to new just I create that are you Okay, the make go subscription not this it's quickly? that clear are sure

Jeff Rosica

we Yes, the terms ASCXXX. so follow of accounting in accounting,

is the the first portion and enterprise signing that's where to likely into with our will So, there the time renewals have in accounting, then respect respect lot be the upfront converting And subscription of in the because that those the we especially to seasonality, come will we more agreements, of fourth and a recognized be an quarter. agreement. of for revenue driven. at account amount enterprise to with certain subscription That's enterprise heavier of customers year-end maintenance, the

stronger the the when renewal subscription of the weight those enterprise So in and the expect is in we fourth first quarter, being revenue with periods.

customers maintenance of move obviously we contracts the and pattern subscription. a that our its when is of to also but accounting, enterprise And function those try business So cycle. both the

Nehal Chokshi

well? Understood. lot I just subscription. enterprise here. of a seasonality ARPU do the I subscription. try And to through can to as on implied you that there's with decline calculation And a an walk the year-over-year has also a believe this then do But your lot investors of know

Jeff Rosica

Yes, the of at fourth the the have values those revenue, first again, the quarter the price quarter, terms of seasonality in so are enterprise, -- in we because and of terms seat. we'll enterprise per more of ARPU, higher

reaffirming when expect as good plus in we And ARPU of subscription you have Again, subscription higher would that we guidance maintenance the direction periods. gave that's quarter. about the stronger we're in So a very feel business. last the to those result,

Nehal Chokshi

Right, okay.

on discounting time, any more point crystal pieces a And to correct? or of you in then pricing pressure that any the so seen compose be this at here, usual subscription clear than haven't

Jeff Rosica

but that run of favorable we do margin XX% call, Nothing been one-offs out for had business. couple over we very margin. gross diligent have absent we our we mentioned in And, we would ordinary, a of gross that every terms in promotions are the like the of company, driving

feel good sales organization. So the margin we profile, the of about our we discipline the in direction that have and

Nehal Chokshi

versus Okay, then -- cohorts? between that, you cohorts change the any And [anniversarying] pandemic cohorts the Have seen what rates call pre-pandemic great. your I'll now pandemic in creatives? the question final so renewal my the is

Jeff Rosica

and subscription rates have we optimistic success customer say, in the remain on when we the continue strengthen in the we call the would as No, model. I renewal, to team I to And point, more at our very is business, continue are that to nurturing had, retention would programs looked -- this invest stable. continuing out even

So the we the direction very good about feel of retention.

Nehal Chokshi

Excellent, thank very much. you

Jeff Rosica

Thanks Nehal.

Ken Gayron

Thanks a lot.

Operator

Maxim of to next Vander go Group. we’ll Jack And Aarde

Jack Vander Aarde

my taking talked remarks, questions. for solid about guys. results, you Jeff, sound. Thanks in your Great, live prepared

your can the But just below guidance at wondering to look any still I during pandemic, the higher played revenue you your be for a wondering followed just than revenues in how guidance that in this So pre-COVID. how decision, of the uncertainty Delta here, much of general, of XXXX variant XXXX. how up were during to other with maintain with role you a decision quarter kind much role as believe and that, COVID much just quarter that

month that thinking about uncertainty. were two relative of months because or Maybe Just what ago you ago? to a

Jeff Rosica

month. -- demands way do is I I Yes, what to adapt the are to and look, think And the is I every our are starting think started that industry -- think say industries I through. have different situation well, COVID

future. market. at country being an at if that's careful. know said things. we're approach, be other on way, And trying think out I the going It's before, of you that with the to we're like the looking in far just not very our are impact big there's keep an cautiously that global, one we're trends balanced to remember of don't look even proceeding I So markets I best U.S. to be way optimistic, the we're We in the is the -- say, looking we're we're we're got in again. trends, But doing. stay we're balanced every I and the or trends so what on -- way eye

live different back. events coming are and is So we is what are every market situation, seeing sound live

that's As like what times, us. like seeing uneven could we're funnel seeing I and the balance like forward. in be said going of in the my we're trend. at We ahead remarks, it why but being a as we're our approach, We we

think is overall, a business integrated be a times going business, think for at solution XX% XX% it's of is of our recurring now So revenue. our I the It the of to It going right is is be business part recovery. remember gradual our -- -- our uneven we're direction. in I lot could

So business. and it uneven say is part the smaller that is smaller of can becoming our be really a let’s part

whole been we've and very as revenue seen our pandemic, has stable So, predictable. recurring through very the business

keep we a And eye heading. So, it's the an markets that the seeing. we are our like again, we direction piece have like of to but business what that on, we're

Jack Vander Aarde

in that's if that be there. there's clear I a Is second for seeing subscriptions, you've the Ken you Jeff you then of And the which it's try subscription good can X,XXX just got up? breadcrumb quarter trend? a that retro remains pack. where And ‘XX, quarter, MediaCentral now that, appreciate of to a them? But, to now trail as quarter, subscription robust. question that trend what enterprise see of picking in you are for those the But if enterprise the you to little momentum added very the into bit price limited quarter also then ‘XX. had your Just fourth terms -- more may well. MediaCentral Great, factor actively, maybe a it trace first as and additions [indiscernible] wondering the in dig growth partial and color here

Jeff Rosica

it, enterprise is team seasonality quarter, again, focused on is the there sales -- Ken closing to every some like as it's Well, seasonal said, -- subscription business.

subscription, And are because to of in it normal those so reason sales effort team we least, there conversation for discussion. to team of of time there's renewal has, the at QX, bigger that our bigger at the because software will sales on have success why natural a is maintenance a the people a the opportunity, is have subscription is that and contract maintenance every that our Part contract, QX get doing quarter.

more percentage is quarter. a it. sales But have the Revenue I more there's very our the got momentum, subscription Tom secure as every But Cordiner, incentivized this. small we like we're focused I besides converted. team that well think It Chief subscription QX about to going will that tools and on the And I talking quarter. team percentage, we of all always So during going see, be like small enterprise to what opportunity our I Ken customers, I seeing. we're They're our is our energy sales very, by he's single-digit good and different think, QX. on Officer, as say we've focused be in And customers to engine and mean, of about is, we're this, and it'll say -- talked this the and Tom said team even the for enterprise creative would said, Day, to Investor small Ken said been I very very Again, very efforts business.

opportunity And the -- so of ahead it's stands us.

Jack Vander Aarde

it given like volatility, customers also the percentage on the very talked enterprise the like terms then small kind range comments as or may of a And follow have in up you. just your Got just converted, about of of a what from with you the that, those subscription. interesting do function? the actually that have adopted Any terms of of the the noticeable trends customers deployment the enterprise like interest subscriptions takeaways enterprise initial of size in end vertical or they like of

Jeff Rosica

of can in a enterprise actually buckets. it's media program the and sports is of newsroom, put probably subscription they're applications, for creation. news, big kind production, I lot so think broadcasters production, the larger different market of a using yes for -- news and for companies Well couple you One them

media there's tools supporting not and ingest is MediaCentral office And manager and so just and about workflows workflows, the also it's creative distribution also or workflows. workflows the about back creative

lot of a there's encompass can that that do. So what workflows medIaCentral

and is the not Tools because sound, customers, sales enterprise focused is creative and team MediaCentral, tools, there's the of the for just Media cetera, et the that MediaCentral on on, tools, part working a tools converting our of they're Composer. but obviously, mixing Pro MediaCentral it, applications editing also a is Now, big lot like

size of application standpoint, a post-production, video businesses. generally we opportunities get post and in one enterprise in post-production licensed the sized number or Ken in opportunity there's it's customers audio said, it's customers So smaller-to-medium XXX also XX are number are our can XXXs of markets, of a with seats kind those those so customer. to there's lot they of for the from as from world production opportunities. to have customers those that an these the But those the just around And convert there, dozens X,XXXs customers large whether you there's

Jack Vander Aarde

place customers. And right are Olympics and the now. just given then for taking to just one it. Olympics are connected your the Got question And more me, you heavily guys

the third quarter growth with or revenue show all this revenue? things? this in Is is for one-time kind catalyst Olympics a immaterial costs one-time the generates it costs cyclical kind wondering year a of of how Just the -- of is at in Or sort ‘XX? four of grand this in your scheme

Jeff Rosica

that do, is Well of regarding be the business is I taken. any agreements Olympics multiyear the some already to careful been on of already we little we they're a have revenue or that Olympics enterprise agreements. some mean, kind

revenue. been our recurring as So that's recognized already part a of

I'm or looking sure But significant. of scale there answering that be that may one-time things. event. happened, months a ago. some that, I'm our the got product do they the revenue take in make is Accounting not The only I numbers Now, there are Olympics stuff quarter, do revenue fairly Officer, question, would some stuff year Olympics rightly. when be when happened the be looking in or small happened That something it's it's mean, I related some that could to some things they is happened. they project the Chief Ken I'm would related like may the PS that small already upgrade storage when business over ago, at It's when take over at has they careful. the if is would actually to revenue at a happening.

Jack Vander Aarde

me. That's, That's it that's for with again, Fine by I guys. me. Thanks. the appreciate good results me.

Jeff Rosica

you. Thank Great.

Ken Gayron

Thank you.

Operator

Jefferies. next [indiscernible] from of hear Jordan we'll And

Unidentified Analyst

motion. so for congratulations us ask taking wanted question, quick is my Hey. on the quarter. Hey, Jordan a question this [indiscernible] go-to-market I to Samad. Thanks about for on the

reopening with assuming quarter-to-quarter, are think notable the digitally am pretty I calling there, like in that trends seen is changes you out? As worth versus or maybe have you consistent any person

Jeff Rosica

customers our we're Well, remotely. our of like in whatever. go German like see London, sales some into or team certain still go engagements markets, can we into our of German York New teams or certain I or mean doing London our most can customers,

some engagements So say face-to-face. zoom engagements or pick your teams there But is still engagements our are I'd tool. or of XX%

team project hardware business, sales involved, still to -- where there's software the about COVID remote is So got fairly one subscription you've engagements. that's helped. that unlike a The be nice larger has really thing our conversion honest,

to I in do maybe a in even think, how to site. pandemic business though motions our physically aren't do commercial those software people a our teach and team and teams, how sales

capability. I think distributed pandemic work helped to one thing the more flexibility they is, people a realized more that us worker needed and the needed be remote

motivated way that about talk technology. deploying and so us our of this a to and team with engage buying with really And commercially commercial to engage people new

our it's customer-by-customer. sales been go-to-market for as help motions, really their sales So team, a their run a of

Unidentified Analyst

Great. kind expectations heading into that during along given is a quarter initial lines, been sales of lately, hiring tough versus And how environment your bit same hiring then it? the has maybe those the

Jeff Rosica

I quarters. especially think is prior different in, businesses, in tech hiring right a running little I than the you're say about a -- in mean, let's it's

But saw I had, I to accurate. sure if bit think, a say, have that. on circle I'd happy I'm I and exact don't really But give pre-pandemic. little haven't not not new but people bringing they'll numbers. slower fill got we longer, little to precise something answer, the a but I are to that's call would data I'd say we and a fill we're you rates on the say it's on probably hate rates, back

Unidentified Analyst

quarter. on a well, -- And So great congrats thanks. again,

Jeff Rosica

Thanks.

Ken Gayron

Thank you.

Operator

turn back additional And presenters I now any time, comments. for our this closing so or the at will to call

Jeff Rosica

you, you to health safety for to at extend deeply with and thank [indiscernible] our for your collaborates continued who participation and of thank everyone happy questions. want us. I Avid. your continued for follows grateful And We're everyone operator. wishes best So everyone the your and support.

So goodbye for now.

Operator

does that again, thank everyone would like for And your conclude to call. participation. We the

You may now disconnect

Avid Technology (AVID) 4 Aug 212021 Q2 Earnings call transcript