AVID - Earnings call transcript Q4 2021

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Operator

Good afternoon, ladies and gentlemen, and welcome to Avid Technology's Fourth Quarter and Full Year 2021 Earnings Call. [Operator Instructions] Now, let me turn the call over to our host for today's call, Whit Rappole, VP of Investor Relations at Avid. Please go ahead.

Whit Rappole

Thank you, operator. Good afternoon, everyone, and thank you for joining us today for Avid Technology's fourth quarter and full year 2021 earnings call for the period ending December 31, 2021. Rappole, President Whit and Corporate is Relations. Investor name Avid's for Vice Development My afternoon Rosica, Financial are Officer this me With Jeff and Gayron, EVP. and our Ken our and Chief Officer President; Executive Chief their for and Ken our your business financial questions. remarks, of review results, operating a then will an will provide In overview prepared followed the and detailed provide of Jeff by time on have this our We will earlier prepared we a release and we slide earnings issued refer afternoon to call. that presentation this release call press currently website on available The presentation and available a our time. our are and ir.avid.com replay website for on will at a limited of this be

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

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

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

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

Jeff Rosica

quarter and quarter Avid's XXXX delighted performance good results. joining into full thank we and I'm us you fourth fourth Thanks, to to for Whit, heading report strong year momentum and ended review that XXXX with XXXX.

continued revenue for revenue quarter, solutions we and subscriptions to to fourth growth guidance, strong our profitability provide our move and both storage believe continued strong working subscription us continue our free solutions strengthened towards guidance by into with delivered high solid clearly end our and creative in benefits as maintenance customers, growing integrated the deliver and of beat allowed total and stable business, will EPS XXXX flow. cash This expectations improvement see tools. the QX combined we for revenue During we is of our exceed continued and to shows XXXX. our in subscription to for subscription to Due adoption non-GAAP enterprise and and the strategy that revenue audio our performance, I we maintenance which

now the of me details with some you. share Let

the During key takeaways our three following. the were of business performance fourth quarter, the

very our First, continued which additions for accelerating with strong subscription robust subscription, steady tools. new with a quarter we expectations, exceeded creative enterprise had and subscriber along

with into by momentum our profitability solutions Overall, to performance continued our audio combined us customers, our enabled on execution, EBITDA combined growth heading healthy overall good stable our business overall focus new for maintenance demand and strength integrated subscription the performance, and with the sustained and in free sales and finally, healthy And the Next, fundamentals the in flow. XXXX with solutions cash margin, storage revenue our income XXXX. strong trend. and very combined existing good of net strong growing and end the business, revenue QX revenue with resulted

business. the product It enterprise subscription the provide a available and these with was is make a to also three second now go-to-market quarter our that ready our refine QX of creative delivery with Enterprise continued of growth enhance of tools ahead areas. motivating count Composer subscription customer another including growth subscription accelerated increase both our subscription We the quarter again based for leg base bit quarter customer contribution requested in plans. some for solid in on driving and as of net confidence during to exceed MediaCentral XXXX, the key customer to me in the our initial some our let healthy great overall Overall, net products, expectations, to specifics enhancements. products improve subscription delivered a which lines, each capabilities. we Now, in subscriber XX,XXX, more Media our adds over dig several move all and on for is as experience additional enterprise growth our our increasing steady and us continue our from to to tactics make subscriptions, Flex

Bowl look other sharing We the for example, we're to of XX. productions fourth able Super details customer successes one used one around MediaCentral, Olympics things, do As among to for their forward NBCUniversal in both quarter. migration globe additional recent and in many began which about was This subscription Media and the to. were Composer customers' just their example as the customers Winter

fourth earlier product revenue as our We During was audio with sound trend and rates Overall, integrated best software solutions, was and growth. the solutions improved storage $XXX.X growth, quarter including Demand renewal revenue including realized since XX.X% and integrated our performance our healthy we with services, areas across healthy we geographies from very for control our all end revenue segments. strong, XXXX. the year-over-year consoles. of to and solutions fourth also for maintenance We in maintenance recovery demand quarter, consecutive both quarterly I/O benefit business steady price XXXX. strengthened, the integrated delivered benefiting for markets demand experienced of all the customer million from implemented continuing that audio and increases in live

had contend have world, around along with we global challenges. the chain to However, with supply organizations many

in navigating certain implementing plan team proactive good our thus Our quarter able the situation we while price optimizing our increases were gross and meet and in to integrated in solutions late XXXX. protecting has by done margins the a for QX, job

diligent looking forward, chain near this shown as the to remain but has be in is effective to at point. have expected our supply term, challenging team quite be will the to to confidence as global I the We situation managing continue

overall The quarter, improved the the fourth on our maintenance and cash in focus drive helped very of improved strong strong software gross and with controls, in margin. growth free an profitability business During healthy volumes margins revenue to our resulted continued combined and performance, flow. solutions higher-margin margins, integrated expense gross and increase

Overall, result at strong commissions performance more our overall commercial and strong investments flow, expanded our performance same teams, and we our still the in fourth year-end adjusted also bonus we did QX. XX% of As EBITDA had and free cash additional flow very of growth. the of profitability spend yielding in while product a quarter a time, free $XX in But the had future our accrual margin in strong technology drive we innovation cash quarter. a million in to and on sales the increasing of conversion

only all surpassed offerings all the total million $XXX we Subscription the say, subscription over, at revenue both in revenue exceed paid year the interest our growth quickly the at total across driver are our geographies. be let's of Enterprises subscriptions, with their XXXX. in of from should new subscription I for are XX.X%, over in strategic expectations continues key so released at products with subscription bringing to overall areas demonstrate ingest strong at on fraction about transitioned new the We our subscription generated such ability beyond. media the to commitments adopting still and metrics we've enterprise metadata look including XX. Adobe, which our contributions successful more with Effects XXX,XXX year agreements Photoshop to business to of year. now fiscal to work XXXX and We with support of several XXXX, and set subscription After several But and that of we beginning as customers and year-end and in more far, main product continue from expect customer our Sync highlights bringing Now, growth XX large we year. to enable important delivered the XX% in our base MediaCentral fulfill MediaCentral features of updates the less be We during and customer small and to during we to transition many IP-based And on enterprise updates backup and to and closely than a enterprise from openness, to and MediaCentral delivered Stream MediaCentral products for sources. platform. our

we tool updates users, several Media requirements. delivered and addressing market For Tools Composer to Pro important shifting creative

their from resulting quarter, for around next-generation Sibelius during users music directly users, using launched mobile third For Sibelius the Mobile notation in new devices. world we the iOS

shift technology will experienced customers. believe requirements. the have With production to the became cloud-based new SaaS-based resonate priority as and changing support Avid's with innovations that and capabilities our past And remote workflows The technology more their our we year, more Edit our such with we dynamics focus post-production market this need many Demand and have solution. in On customers planned innovations for XXXX market our exciting was

enable element trend the map. all with necessary cash bottom customer of R&D EPS journey, did began our cash year a digital generated engagement, business important to many to of into with an transformation during us are support $X.XX non-GAAP In we customer we our business since first support in investment our strategy. we performance update innovation transformation and of investments investments increase fundamentals, the future million while and which highest our internal XXXX, making delivering to benefits free of year-over-year for We XX.X% improving to the systems road support increased While flow free growth. saw in support in $XX.X is we We XXXX. subscription continue our the an our of improved our to improved our We our future. starting flow, digital line this area experience

flow we initiated result, investors. return free a a a our September repurchase our of to program to cash As share portion in

that recent a buybacks good have crisis. plan, and in at the strategy our use Given that we the believe long-term the confidence capital share of we are

we XXXX, repurchased $XX.X worth During shares. these million of

let's business where see going we a things talk about Now, forward perspective. from

for As subscription to Avid's during healthy market driven February, this offerings demand seen growth EDGE teams creating innovative for initial to requirements promising launch remote additional innovation for product and tap to we growing software subscription cloud-based opportunities. fiscal unique are in expect We've solution technology and collaboration We content, TV and we launched and investment have in to been additional reaction end video demand and and we NEXIS market XXXX, the XXXX increasing continued week new audio high-quality solutions. for our first additional planning innovative solution. film post-production a look by year consumer QX

a as separating graphics few. the from as management later Storage the NEXIS offering a production software be just news name along to subscription in storage also the will a storage We base subscription, value appliance, of XXXX, with

to expect enterprises business sustained in to our on subscription based and the the continue both success creative individuals. with growth we've date We seen

enterprise many growth new We adopting interested enterprise we customers more expect And customers current enterprise previously, of subscription offerings as to will this as offerings. our as be that expand mentioned support we're across well XXXX. our our subscription planning to in

product expect music tools We to part pricing deliver our market investigating continue coming next-generation in creative creative our expand growth. more on solutions months. the this and To look news will more we that as few and attracting subscription further tiers front business, also Expect our we're of our their this more currently creators. for opportunities optimize tools new for

execution development continue product new continue will in to discipline and to our certain and our We initiative. needed support we digital while our investments spending transformation innovation, our increase

challenges margin EBITDA we adjusted to conversion. targets that addressing chain team continued our supply strong meet we margins, margin. closing, cash year. gross free is expanding can are our experienced doing things an the continue while that and In expect have And to these the profitability we We ensure for flow looking and

XXXX. me of factoring while to supply will impacts now With Take more into over continue for that, best our call of our it constraints the the estimates of Ken We already emphasis details. to operational improvements on a let our on chain potential the focus away, Ken? financial and review execution turn planning

Ken Gayron

the and a of as are we results during us Thank our made substantial gross Overall, closed combined fourth fourth margin higher and year in and well XXXX. with maintenance margin, solutions revenue our business with We subscription we strong XXXX. us positions growth, the and with pleased integrated we ahead exit financial enter in This free deliver flow the enabled performance to strong quarter. We cash revenue quarter you, Jeff, quarter everyone. with and driving progress expectations. good afternoon, as fourth improving profitability very

of build to and continued results. will of that, Our the the XXXX stay to by focus for now track an subscription Creative acceleration had on fourth our our let's base subscription continue fourth our as from our XX,XXX details exceed growth was we to our were healthy subscription net the paid expectations. long-term quarter, quarter prior and With with the margin revenue turn subscription and model. solid in quarters. in growth high to additions performance continued financial encouraged We the enterprise be

increase subscriptions tools. fourth creative about all software count an total to increased year-over-year. tools quarter, the an at growth during of average Our during the the quarter. by Subscriptions Subscription XX,XXX, cloud-based an X,XXX with approximately XXX,XXX our fourth XX,XXX the MediaCentral XX.X% for increase strong of across was year-over-year creative fourth subscription of approximately approximately growth XX.X% of end suite our reached of grew tools for quarter.

We continue to acceptance with be X% we converted during the pleased of the the to subscription year of MediaCentral We very of first to market perpetual believe customers MediaCentral about the existing availability. have XX% subscriptions.

which composition as enterprise the to year-over-year. tools. per the our The our And pricing the XX.X% growth quarter, continued simply an paid continued number revenue increase to have an of the reached of revenues. during the of in subscription creative in drove in see revenue subscriptions subscriptions million, continue we moving $XX.X increase per than seat higher seat growth Now, fourth

price part conversion. maintenance X.X% in during Maintenance the $XXX.X continues we For subscription from quarter, and during XXXX of renewal earlier be Maintenance a was $XX.X benefits increases year, saw year-over-year. million, XX.X% fourth fourth was rates implemented revenue encourage full business. part we quarter, as million subscription strategy And strong to the revenue up year-over-year. the the of the the to up increased

professional the down our was $XXX.X maintenance Total above For software fourth full year-over-year subscription quarter year revenue subscription Total exceeded fourth licenses XXXX. strategic and total the Starting XXXX. subscription income to full XX.X% perpetual $XX.X for statement a maintenance are from from combined perpetual with Even the decrease revenue. each tracking the revenue as full our million and subscription and of by million, to the the favorably steady was perpetual revenue XX.X% million revenue XX.X% focus revenue guidance and quarters long-term throughout by as $XX was on XX.X% by revenue. our in revenue in X.X% the the the we XX.X% the year X.X% the separate to deemphasize and presentation we of decline year of and by roughly in and our on was the year, up in the maintenance decline. and in at X.X% have year-over-year with Combined increased revenue up changed quarter for the in revenue XXXX, in XXXX and year-over-year these Perpetual maintenance in fourth million, the quarter and types and quarter year-over-year. year revenue, in in decrease subscription $XXX.X revenue full quarter, we growth XXXX came year-over-year $X.X integrated fourth fourth of model. XXXX, a million year-over-year increased subscription for licenses of year the license revenue full and continue services solutions, XX.X% perpetual perpetual XX-K

Integrated as year-over-year solutions capacity. well sound control revenue -- sequentially. Live driven was as business revenue by continue million live studios year-over-year growth quarter, the solid integrated XX.X% of services full million, products Revenue since revenue The solutions and demand XX.X% increase for for year-over-year. up storage. decrease $X from opened. to increase improving to million, and consoles storage year increase best performance revenue the year the full X.X% businesses. our revenue year-over-year revenue Our of XXXX. XXXX up $XXX.X have but for in storage an year-over-year our learning also year-over-year integrated quarter from and an new XXXX. fourth services, and increased remained our Audio quarter, many of fourth was services XX.X% the was up year-over-year was of Professional balance a $XX.X in services revenue slightly many of product with was our healthy add large was X.X% of comes an as sound due and nicely professional in control venues concerts solutions The

to recurring moving Now, contract and annual value. revenue

and on pay to driving gross focus business. strategy recent to improved Our off continues is sources margins in greater years in revenue and predictability it our recurring

fourth recurring increased was a XXXX in strong to of long-term XXXX. revenue LTM up agreements maintenance was in XX% contribution strong percentage at a Annual partners. million revenue As revenue XX% recurring year-over-year. higher year LTM from agreements channel revenue, The of revenue and contract the fourth subscription ACV to stable purchase from growth from XX% with ago. $XXX.X up from of the and the total end value growth the our strategic benefited quarter, compared due quarter, our greater revenue revenue, year-over-year subscription

and of year-over-year. end year-over-year. basis Now, fourth fourth our currency, full our XX.X% revenue million, for $XXX.X quarter was our Total and results million, quarter, Non-GAAP of quarter constant was was the increase XX.X% the high full and in XX% above for guidance. let's fourth points year-over-year year rest an the $XXX.X At XXX the XXXX XXXX fourth XX.X% gross of revenue look year up up year-over-year quarter the margin at increased revenue XXXX.

expenses XX.X% from million XXX the to was $X.X integrated compared Non-GAAP margin. were gross points million in subscription of in full the as percentage operating including XXXX, XXXX. increase revenue year million a for sharply put of in pandemic. and operating commissions $XXX.X which in Adjusted share revenue Non-GAAP Non-GAAP business XX.X% to were $XX.X EBITDA for the experienced fourth levels, up performance. coming time, an benefiting revenue improving helps the of EBITDA in year from in resulting same year-over-year, year-over-year Adjusted the million beginning and gross furloughs operating gross quarter, stronger increased in fourth year-over-year. expenses efforts, made larger Our primarily reflected the $X.X basis fourth increase prior high to down the the million accrual sales as trends compared or a margin of XXXX fourth $XX.X were quarter, margin year-over-year quarter, the XX.X% which expenses period. in place due operating Non-GAAP was a at from margin. million bonus margin our from of year, quarter. up were improvement was adjusted Non-GAAP over solutions of revenue revenue down the in temporary of XXXX, margin cost-saving are drive expenses a $XX points the XX.X% up EBITDA XX XX% basis XXXX, the year

the $X.XX For for Adjusted in annual the and increase up up year-over-year, full was was towards basis the reflecting quarter, interest improvement XXXX. Non-GAAP guidance, improved strong the expense margin the share the both income. adjusted by points was revenue $X.XX of share earnings per full EBITDA the at lower XX.X% XXX million, end and for $X.XX our reflecting per income earnings high during year was XX.X%, margin. year, operating up the fourth for operating XX.X% an full the XXXX, over of $XX.X year EBITDA non-GAAP in and XXXX, gross year driven improvement Non-GAAP XXXX.

let's to delivered flow. to EBITDA now flow cash the conversion turn significant cash and cash free of free improved adjusted in improvement consecutive of leverage. and flow years Avid free Now, has five

fourth to effective the smaller quality investing $XX continued contribution in in year-over-year cash with Free of reduced million working to down capital together flow. and compared growing was million drive revenue, of cash expense, cost XXXX. Our controls free $X.X the flow quarter, trend strategy the higher of to innovation from due interest recurring a quarter

up further due an expense. Free reached cash increase from XX.X% in For improved XXXX, interest conversion flow XXXX, from $XX.X of the lower non-GAAP in was non-GAAP XX.X% XX.X% adjusted to continued to cash due business. in year-over-year the full improvement in million, higher of operating our believe year and income flow free more more free EBITDA XXXX. management recurring business effective flow is to and and streams Avid well predictable cash revenue We drive our to positioned movement margin

at from Our flow resulted free EBITDA strong XXXX. at cash quarter, of adjusted in in the down end the the end growth leverage and net fourth X.Xx X.Xx of of

were are last debt a result and facility we Company our points the terms and XX Overall, balance the our improvement to cash of to and of of amend basis our improve by interest provide As the and pleased the grow other credit allocation reductions certain leverage flexibility alternatives long-term our agreement. its strong and with long-term free able to the significant we in reduce to week to generation, rate to leverage flow our value. capital our health as drive shareholder net business explore sheet more credit operate

$XX XXXX. fourth believe XX, these use prices the And million $XXX repurchasing announced million model. in given returns for repurchased to have we approximately million our We business is in XXX,XXX of capital shares good February we enhance the quarter, our $XX.X shareholder confidence shares the through of at long-term a September shares total million. under During we authorization a for repurchased X.X have that

we to repurchase ways responsibly well as and drive continue deploy as look shareholder flow will our acquisitions long-term cash free strategic will to as value. We tuck-in share at

Let's now guidance. turn to

are enter said, the strength Jeff in as confident As XXXX. underlying we business we in our

revenue from our creative performance subscription product subscription strong tools business, expect new from expected from our our continued growth subscription solid We in contribution enterprise performance in introductions. and

integrated we addition, solutions performance in healthy In revenue. continued expect

growth revenue of XXXX, midpoint. first X% total a the For million, which revenue $XXX to represents our range is the of at $XXX guidance quarter year-over-year million

first maintenance $XX and to $XX subscription guidance million. revenue XXXX Our million is quarter for

$X.XX, is assuming Our EPS guidance for XX $X.XX outstanding. first shares quarter million XXXX non-GAAP to

for guidance At providing EBITDA $XX.X million $XX.X the first full for year million. XXXX adjusted to quarter XXXX. guidance Our also this time, is are we

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

$XXX maintenance which and revenue is growth a midpoint. at XX% range XXXX subscription year-over-year $XXX of to represents for the guidance million, million Our

EPS outstanding. is to XXXX guidance Our non-GAAP $X.XX $X.XX, assuming XX.X million for shares

flow EBITDA us for digital Our $XX scale capital support roughly Whit. $XX million. our the which And guidance business. With to like call to an to expenditures to help free XXXX million, $XX is XXXX million in efforts, that, $XX increase which includes is million cash subscription for adjusted $XX transformation I'd our million to guidance our of will back turn

Whit Rappole

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

Operator

take first you. Instructions] Riley. question Thank [Operator We'll our from Josh Nichols with B.

Josh Nichols

the to of that you going see trajectory. Company curious execution Could strong I'm path growth Great like one investments XXXX. or talked such in and some along you further going is front are to opportunities throughout it about CapEx to for to SaaS a of what fourth and is making subscription million additional subscription new adoption highlight the move think quarter this that to be that of model? most be on be moving Is bigger storage you $XX going kind more is the towards towards? 'XX? of that going two where And

Jeff Rosica

Josh, is to businesses. office tools One use of e-commerce support transformation, office is and that upgrades the towards so, through and couple going in doing we is -- our back digital and which our platforms cloud that a technology lot the really we're a enabling CapEx subscription front our things.

subscription cloud-based and is really that SaaS-based lot a offerings. all capabilities or be plans so around of of support lot upgrading of to able technology upgraded a the and to And

this in a areas. that increasing and investment, across subscription, making we goes is R&D The a my mentioned In our R&D storage, too, you new offering. opening mentioned number we're all it I are it remarks, So, we year, products. of are bringing around investments

of we're a to subscription for value hardware. real new commodity storage the around the our going planned the off-the-shelf of XXXX value We from have software where offering bifurcate solution --

And also creative so done done But as a teams enterprises. that We've we're and we'll individuals offering. launching large be offering we've bringing subscription. a

that's called other out in We a and also servers graphics mentioned have mid-market areas. coming teams XXXX. I And product and

growth of digital transformation leaning not areas. product remember, continuing support growth bid the But subscription year really And those around but in that into May to over both just all big enterprise years part So, out to a our number as we back doing on several drive the couple areas a of strategy, the better teams, we're of our plans of meant we're have even for last we growth next also investment this offering a is of laid are a market on year. business.

Josh Nichols

I at going XXXX? Company did. I several years. remember strong such as mean the we over for I you good about coming last a the I'm about expectations finish gross margin think guess, about, is gross a line looking bit the like, This the off least could should talk how as more little at Could to forward the margin

Jeff Rosica

are could we Josh, I'll Company. the efficiency drive that Ken said the I margin. models, to how on very continue our business I let we're operational DTI also -- thing to of One Ken and answer not focused have around is it's to just about enabling

Ken, improvements it a margins will continue --. year. some maybe you next it few exactly want help towards this to so do not But will do of But in to company. over in And efficiencies the terms years, as our -- will contribute

Ken Gayron

Yes.

gross to Company So percentage as business. the in set for we've past of our in the out seeing revenue revenue the drive subscription Josh, years margins, the and you're the terms revenue, that of has percentage our three revenue. strategy our our And subscription recurring been improvement recurring a

quarter margins up this Our were substantially year-on-year. and past

subscription those new the our well our That's in as of long-term tracking to a As subscription solid business line numbers continue drive of continue our of margin we that what terms Jeff XXXX right products, model. areas, continue we ahead of our certain tools, now, drive to creative in expect gross margins. improvements. MediaCentral and and we to as mentioned in And our revenue will innovation we ride have gross including terms we're the

in expect that historical continue substantially confident we're terms outlook. of year-over-year, and that in in we performance So, model increasing very the long-term gross margins Company's to our

Josh Nichols

then me. And for question last

for the was marketing a a model, about payment? you payments. anything the little And Like thinking you're was of investing sales sales be about that or since what and mean, that of then target the if assume for a that some bump for have amount terms high-level to more Just in in expense, thinking bit dollar I the R&D bonus like just I 'XX? going for

Ken Gayron

Yes.

we of very both and So, we had year. line also bonuses, million beginning of and the the revenue maintenance million $X top and what on at sales operating $X revenue. actually to thought higher -- in the drove the strong the expenses significantly marketing terms and But were than side we higher obviously, subscription initially

So, total areas, we we were that's guidance, revenue. why were guidance those also two on -- over over we

So, that the was commissions, Company's only basically, sales overperformance, to the $X $X bonus. drove corporate not also million million which but

Operator

our Nehal Capital Chokshi from Northland We'll take with question Markets. next

Nehal Chokshi

Congrats the CapEx guiding, flow the the you're of flow that's free and cash guidance, the especially free especially incremental cash really in results, solid impressive. context Congratulations. the million on $XX

in So, your maintenance Can versus for those in that year growth maintenance calendar of year-over-year you growth and a what terms subscription you've subscription terms rates? are given out for of 'XX, of expectations XX%. parse

Ken Gayron

we we do base the -- midpoint revenue our come correct, absolutely XX% maintenance on over of of maintenance. and We down do move is combination tell I guide subscription growth. can customer as more just year subscription. the you we next directionally, So, to you're And to expect our as

$X year-on-year. probably million directionally, in look maintenance can you think revenue $X the to coming at million I area down

the in is subscription business all of the said, So business. to the going that growth be

growth graphics, the and growth tremendous MediaCentral. the subscription you that solid NEXIS got enterprise three products subscription, the product, the We've on on that obviously, layer revenue contribute additional our momentum have the tools service new in business. creative to and mentioned, will Jeff then We obviously

So, in we're before, subscription said our long-term very driving about those the them. And certain our slightly and revenue. areas, we subscription in of I good as continued three one feel growth areas tracking is ahead model business in

Nehal Chokshi

maintenance here? it did come So, that you maintenance you saw like can actually And you maintenance in why that renewal expect of rates given not just I'm you're kind down surprised further rates? you see sounds here, the expecting improvement improving improvements renewal to the review

Ken Gayron

software The said, actually executing revenue come a there'll the the our maintenance, to in that job will that's a of That's off has what over we done some obviously our be No, and had models. that's the that, we those is of, in maintenance job. modeled in team move That long-term tremendous pre-COVID. our given execution that's under say, revenue subscription the product has that decline terms over we team back We're some solutions. integrated I renewals in model. I streams time even maintenance of seeing think revenue customers there We're great mean, levels as that reason a done why team. slight the improvement would to

So, that's what we expect at this point.

driver you guiding is that maintenance stream. the subscription subscription the and I'm be So, going subscription revenue growth the for key that to business, revenue

Nehal Chokshi

the upon free And partially that's impressive what flow, very thoughts a And XX% generation. then on return, dependent flow rate almost are cash I is free of rate cash cash flow I of price. love free realize the free flow the stock of churn? your What cash

here that Avid it's continues NTM price So, have let's assumption XXx $XX share you cash right and plain just EV or that at to basically, now? make free trade per flow a

Ken Gayron

Yes.

of I say I we terms So, would in rest with and a allocation, the first, works have capital on capital team that allocation. Jeff and of the Board management tremendous

but value be cash repurchases. to be to XX% through the repurchases. share We're opportunities you shareholders, in the both. we which we to looking M&A M&A coming or of flow, at number I be levels, share it's looking and be our going This confidence went given was an solid going strategic because we are things during last to Obviously, can't year, at mentioned And attractive and ROI evaluating whether cash going year's We price return best you to expect the to share repurchases. to give both year, business at returns free where are have free these the it change a could be. those

Operator

question Jefferies. take We'll next our Samana from with Samad

Samad Samana

first guys bit So just quarter, on maintenance XQ. the in as you past maybe gave subscription for for I the the kind the I'll a around bounced from guidance. first, a of has little subscription XQ ask seasonality well, years but follow-up know to Ken,

and uptick a terms Just the from any on XQ subscription? about about as to to we XQ we guidance should that XQ nice of seasonal consider we XQ how from need think to dynamics the in from standpoint know sequential

Ken Gayron

fourth performance we tends had in strongest calendar Yes, so the good We be very, the great Nehal. quarter. question. quarter very our fourth Like Thank around quarter. you, year said, obviously to

to also be quarter will QX because happens and conversion generally QX subscription. First typically, a of that way rates strong And quarters, quarter. then from are weaker the maintenance that's

$XX subscription QX $XX guidance maintenance provided million. to million we of and So, revenue for on

terms our that we good our this the business. at year-over-year And implies in think very good about feel in outlook of I business. point, subscription growth

that So question? your answer Samad, help does

Samad Samana

Yes, a maybe I definitely, guess question. bigger just or definitely. And picture then longer-term

As out, are and wrong. to products at Day the Jeff outlook the in into don't of I long-term Analyst but make back want about your I called or I'm guys' that the we're think those least probably that at assuming assumption baked the be minds, newer

we road So, were tracking them And maybe kind see Company factored map? of we outlook? in of How long-term the fitting towards the of some see already those should kind made. has the point, of ahead your into the and Should that incremental? that to progress targets on as

Ken Gayron

R&D terms that and to are year that and happy our products we're these of as map. -- slightly tracking would the road things that innovation I of as products I of we're say terms part that part we're in And long-term going a will new keep model, map I being would ahead. say this this, of deliver to and obviously, had are in we of long-term introduced. ahead spend us these exciting new that model. So, think, coming we're road

there introductions were was assumption new the they -- an long-term product in of model. So,

Samad Samana

when if is in those the software takes? could a puts gross with maybe margins should one, one down I just maybe last think maybe and squeeze how with margin And newer coming and the some in trending mix, quickly. think products we I with maintenance one subscription just gross maintenance and that about having about Ken, little subscription bit,

Ken Gayron

No, I higher would we're getting say than that the maintenance and subscription margins, nice uplift. subscription margin slightly is and maintenance actually

done say that be the to I continue historically. So, up should continue to and should have our margin we strong move margins would like gross software

that provide of add flow to us to to margins of going we in and the transition more options cash So, to -- continue as is a business the forward. and believe as profitability, move we subscription well lot which

Operator

next Vander question from take We'll Aarde Jack our with Maxim Group.

Jack Vander Aarde

start Congrats quarter. just housekeeping of on the ones. results. Strong I'll Great solid here couple a with outlook.

just With data to revenue does just and think change any the historical be don't any non-GAAP does, your new historically looking calculations it or metric but this official I clear, segmentation, change to forward?

Ken Gayron

change What subscription just break to be any No to it for No. services. maintenance out our the clearly more we're on product doing any change numbers. No having investors our to business historical numbers. we revenue is wanted XX-K versus business, and

so that's has also thing. And main then revenue, in kind then area. solutions integrated our in of other, And which business and PS our we solutions the our our perpetual that had integrated subscription

Jack Vander Aarde

And then subscription another housekeeping --. item. On

Ken Gayron

the adapted XXXX, it, consistent XXXX. hey of being -- new with wanted in earnings we make was the speak to software sure how business also, And maps think and what This of was kind Jack, for the that just one just on Page we We this XX-Ks more on version presentation SaaS calls. from just call appendix that companies. historical the about XX to XX-K in is

Jack Vander Aarde

shift And For subscription side sense. housekeeping makes sure. I if to another That then just question, product.

XX, here. I chart you think this bar on provided Slide

provide in anything I and you think did Sibelius you Pro the Tools, to think Composer used read to there's weeds there. don't between time. growth Media this rates. I if equipment

won't you in provide of that? that that? can you're reasonable to if that for provide you forward, assume Just or you not, Or did is kind going

Ken Gayron

would over they remain I all hey, percent. healthy. Yes. say, all They're XX-ish

And about, solid there. creative tools can all our in forward as we business. expect I But we've charts think we going talked the see performance you performance. had good

Jack Vander Aarde

it's and see tick-up, a the sequentially. did And the I it enterprise up guess, the of slightly subscribers this was mix If are annual to shift tick was I like Is upfront there. year-over-year, a well Or to up is from assume ASP bit over the do that MediaCentral fair color nice If enterprise looks just subscriptions of I calculation, provide with which as good it pickup It some X,XXX, then versus up subscriptions the quarter. majority can think. Flex driving you there monthly? ASP paid quite last involved subscriptions rough nuance increase?

Ken Gayron

creative towards the in seat significant bulk higher a The it price enterprise the of multiple basic mix really terms businesses. of is the tool. shift Yes. has that's per Enterprise than

enterprise. given it. creative solid enterprise that of seat well. the that price majority his have that's some tools opportunity the really And we the new introductions these our product comments. and to But the business continue we of we as expect large on especially per it's move with of Jeff mentioned to So, in And also performance in have

we you nice to forward. in as price see So, improvement should per expect seat ARPU move

Jack Vander Aarde

And that number major more Wondering impacts and 'XX. how financials of subscribers if their what for And kind then some led NBC that? color to And kind Jeff. one a for of transition of any on question Sports is just provide model? to do of first does decision subscription if quarter the then to more to the you there could impact

Jeff Rosica

NBC. that was with was QX so That a a -- QX deal

a pretty a And models. it's But at customers the to But uplift. lot in situation. lot generally, in talked higher OpEx share a are flexibility. the more about the gives the those part more uplift a It -- offer I moving picture, we've generally model we overall model a forward. that why look them speak going as the That's of for they, are models, a subscription enterprise flexible is a is from model based So I customers. they a many NBC, It and a reason good this won't customer. but that lot capability. get It getting specifically them I we're more more those you we I bring Ken more we NBC we -- talks and/or what higher a do move going valuable create there's gives uplift. more I much value more think wallet value think wanting look, completely, really to of when through enterprise because can't these average the think calls, lot that customers that them and get offering speak to like about we previous to them about for

traditional per in the of model. didn't lot And a device so optionality of this gives license that them they kind have

Operator

We'll take our next Steven Frankel Colliers. question from with

Steven Frankel

on give if signed the what pipeline looks Jeff, some that XXXX? LTAs QX in insight might of us half some first of I wonder and in the you you like

Jeff Rosica

us did we don't doing. don't do was specifics this would in the But very is that as because very give to it -- reasons. numbers, lot want we say well. you can see for know on necessarily They so we competitive trend QX, I in So, LTAs the saw to their a until the they're allow customers the of what competitors

the we I think when ELAs. we for the to see performance agreements customer. what These you or subscription customers, think are call the enterprise in enterprise really about strong ELA software enterprise continue a

both we with And see also of customers remarks from continue Ken very a uptake reasons We as base these a our to QX that about we've installed offerings. still but we're is winning QX that talked the strong we've new in maintenance, we're said, converted same QX. our in in less I and for think XX% than said

So, existing customers. new and it's both

So, that we're strong I very see seen trend, I continuing to we've say, a previously. would think

the As we got far good enterprise as of the very us. only into XX% funnel, funnel. base. ahead XX%-ish see a We've being customer Obviously,

us pretty value Steve, gives the base like customers are lot those And mine and those move our a we the to current to customer What seen, models customers in really subscription. to of is that that embracing so bring the really models we've strongly. opportunity that do

before in and expectations -- own said internal we we again, say -- on subscription. So outperformed far as enterprise our I'll and we've XXXX,

it's has accounts. the competitive new do subscription attractive don't us, new across great we see thing a customers, stopping. very is we think tool We win that that next a that the for saw enterprise, regard. we logos, also, trend. which other But that look new seeing we great of think in you performance we'll in for years, that couple When three our been see offering are real So, I

Steven Frankel

incentives quarters the to can 'XX last a kind people the couple Or been you Should have seasonality saying the do move of is to of early? with we expect in of in same bolus QX? think you get happening these to really opportunity big renewals that provide customers over And the conversions in move over. those maintenance you QX

Jeff Rosica

as No, But time, that QX sales all at QX. discussion long. and a QX year one I pretty But is that there's not because as think lot of both. there's because big QX. is is maintenance have to for good a team Obviously, did of time number it's the with a opportunities thing customer. the great our XXXX learn we there in real

a of mid-contract. convert lot team have year. they the so within And whole the tools to that team, ways commercial And team to the found we've say, customers got to, customers convert should sales has I

become expires. team people contract when to renews. our contract And have it's or But And we them effective without to irrespective seems and contract of and engaging customers it something comes. a at is we that that's with when that in convert the until XXXX. time learned great renewal very their again, discussion about expire waiting the when contracts have to So, ways to do opportunity upsell

Steven Frankel

'XX? on in systems supply stress positioned components then meet you're like demand is Or And to to need that you of in you model? enough do the that the feel integrated point chain, well get the a

Jeff Rosica

the a say chain upside. the an does -- it's contain mean It upside and bit I for does stress. control situation supply what's a say necessarily wouldn't I upside bit Well, I the probably possible us perspective. from would

expectations our our year. in supply of impacts the we've guidance for the said, chain Ken As modeled

into We've a has our QX. we so done team mitigating have done great And through adequately -- that modeled there. job

a did they and but as they were some team me paid impressed able they our have do because in was the think well. seen situations, quite challenges -- our it the to QX severe with navigate lot could quarter, what competitors during very quite difficult I I've of

as a forward, We're governor it. business. to going put very a well I it potential across upside think our going positioned on is

have have challenges to with. we deal We

nimble adapt through day I and said, our Again, we it But to again, teams those expectations to go and shown things working year, through as that the well. pretty be pretty be that have are teams Our into to but we've night our challenges. think our work got modeled to able to with we guidance. deal

Operator

conclude I and ladies question-and-answer gentlemen, like conference the for Rosica our turn remarks. to closing would will to any And Jeff this or back session. additional

Jeff Rosica

Thanks, operator.

you leave me this. let with So,

our As strength XXXX, see continue the to markets begin solutions. we of end across we do

strategy new Thank that Avid your on and selective again achieve products evening. great Have in to depend investments well a for profitability innovation questions. growth for We solutions to Goodbye your the will industry-leading now. continue as continue to and company's as our participation and to customers targets. you long-term and delivering our make our enable

Operator

Ladies and conference. We gentlemen, participation. this appreciate today's concludes your

disconnect. now You may

Avid Technology (AVID) 2 Mar 222021 Q4 Earnings call transcript