Earnings call transcript Q4 2022

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Whit Rappole

[Call Starts Abruptly] Jeff Rosica, our Chief Executive Officer and President; and Ken Gayron, our Chief Financial Officer and EVP. In their prepared remarks, Jeff will provide an overview of our business, and then Ken will provide a detailed review of our financial and operating results, followed by time for questions.

We issued our earnings release earlier this afternoon, and we have prepared a slide presentation that we will refer to on this call. The press release and presentation are currently available on the Events and Presentations page of our Investor Relations website at ir.avid.com, and shortly following the conclusion of this call, a replay will be available on our IR website for a limited time.

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

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

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

of with see risks a XX-K key some filed on including the information, Form release press with recent our forward-looking more these our annual issued today report SEC. discussion For most of and associated statements, the uncertainties and please

With remarks. and for me Rosica, President, our his that, to CEO Jeff turn the call let over

Jeff Rosica

the and AR perform business well recurring I'm in very growth the for the momentum streams ended with year today a We Thanks, again of robust driven to results. revenue XXXX good right thanks as details. the conditions XXXX. growth about solid continued dive growth joining the quarter we into Avid and to quite to by we healthy fourth QX market today, quarter continued as continued head results and realized for Whit, business and talk into strong with and Solutions is everyone fiscal lot review to the my to us in performance demand strong quarter. as year Avid's There the revenue our see so customer overall let's subscription pleased with

becoming the price, subscription business acceleration with from we selling assumptions of around SSP, of As a for concurrent we considerably financial we independent our enterprise XXXX, the consultation and which reviewed normal component process recognition revenue methodologies, our we of our benefit the in for standalone using determining assumptions the were is part After portion all SKUs, used be the or using and – used methodology of revised closing across as auditor, for these that larger subscriptions, a our our key the going SSP reviewed we'll sorry, we detail forward. subscriptions. we methodologies historically for various calculations subscription and in reviewing

in income and a up methodologies, net by in non-cash numbers effect to which to adversely technical line adjusted XXXX. adjustment impacted trued million we $X.X one-time will quarter. and more the the booked As matter, the accounting million adjustment SSP reported EBITDA calculations QX, going non-GAAP fourth revised back periods. by these $X.X with The how Ken these related impacted one-time of corrective in in these explain revenue details a

the in was Now of this the past purely years. three context headwind the of immaterial accounting entirety

guidance our true-up XXX that of metric and for revenue our period for our given delivered ASC story quarter. within adjusted we what not as to on QX end high of and methodologies, to introduce will the we guidance. release in you results, this EPS this prior to have an complexity and guidance our we at the believe for are had accounting In simplify – effort an period an EBITDA be would ARR SSP investors investors pleased make the non-GAAP see to a If relevant materials accounting the earnings because However, apples-to-apples allow to and comparisons XXXX. periods impact seek press reported the adjustment,

be will past of this the over this all a business. real metric in better review for underlying will useful growth minutes. in As investors we've in subscription of of discussed Ken trajectory with we our investors detail year, the understanding that few believe

geographies We is ended business. another the XXXX quarter, with global our that, terrific other situation all make quarter beginning the and across increased to to progress strong integrated in in sequentially supply of takeaway good important we One markets. QX and momentum, fourth XX% was solutions resolve booking revenue chain are the working on as challenges

reduced the during a quarter, As integrated strong unshipped orders during of end of but at million. orders over received above XXXX of backlog normal the remained fourth levels the result solutions continued quarter, at $XX the was

The revenue the more continued around the business, enterprises creatives. during business company's specifics our remained largely strong which the business of company, quite Let our are quarter, by obviously for of strong both performance recurring and for the me some subscription components driven discuss fourth performance. now strategic

Subscription As and of ARR end the for business total previously, increase SaaS increase was of at to increased was and revenue million, XX.X% as increased I XX.X% million talked quarter $XX.X XX.X% has ARR about performance. an continues of a $XXX.X increase Constant-currency million, XXXX, year-over-year, better measurement year-over-year, giving total become subscription subscription Subscription At XX.X% constant-currency, metric the and the us a valuable XX.X% us $XXX.X increased an more grow, XX.X% ARR year-over-year. of of fourth ARR ARR year-over-year. subscription was an year-over-year. year-over-year. revenue during

spoke and about one-time year-over-year accounting XX.X% I that at revenue year-over-year earlier, quarter XX.X% increased subscription the in Excluding constant adjustment the currency.

as growth of grow subscriptions, is software our quite This paid Company. continued half December an is increasing for an over to during and enterprise and that XX, quarter. It milestone nicely, noteworthy for XX% the the increase tools cloud-enabled year-over-year. paid we one exciting New solutions creative cloud-enabled software important with subscriptions both of XXXX, XX,XXX exceeded by million subscriber

a fast-growing quite and the and today, subscription of part be business enterprise is business future. Our our valuable into will

our our we The and expectations. outpace quite to clients enterprise been has subscription shift for to continue own successful

new are agreements over signed accounts this continues Network in XX like most which Networks Brazil, with our Our in Australia, in moving in here past team very just subscription the U.S. Globo XX sales agreements be enterprise with our and A+E multi-year quarter, towards offerings, to effective customers of

especially the contractual a the customers, are This our that uplift, which are end Company, ARR comparative perpetual accelerate with we Our valuable license has the business near-term realizing. robust also us the of as enterprise of in it enterprise for with a subscription agreements and create options, well motivated as increase these though for does right is of to Company, multi-year quite a decision headwind. the bit commitment

cash cash enterprise contractual or With pressure a near-term have in remarks. of billings. customers will not J-curve complete our timing, to long-term inherent our will subscriptions, due the this to the agreements our assumptions ease This This subscriptions. discuss the for we also pressure cash does annual during monthly Ken dynamic model. our on timing with some change effect our or characteristics as that elements conversion said, his in than different initial cash put conversion subscription detail, and multi-year conversion more flow, on enterprise

Overall, and addressing for for film enabling MediaCentral we with television, in customers creation subscription demand new as to associated have net workflows, see the continued new and our enterprise QX, adds and healthy been continued in content growing production. and customer during production significant demand subscription offering, investing remote embrace apps, to

subscription subscription both stream In quarter, of it a our revenue Pro Composer We we continued tears, number ended mainly net strong lower Tools the segment, slight the in so net in of experience in revenue subscriptions a for solid ultimately, Creative Sibelius growth. adds though Tools was with in the subscription for Sibelius. to we pullback price still growth Media that and saw did our contributed

strategy. Pro new creators, tiered our long-term Tools Our to music offerings us bring new continued next-generation support of in

seeing see to Pro our tier new the offering future activations Tools strong We continue Intro, subscribers. to the good priced decision acquisition to offer subscriber September, newer low-end XXX,XXX has to And tier, become was registered which artist a last growth in free It do. as to thing right to continues lower the subscribers, initial conversion rates date. for announced paid new vehicle over a we’re shows

great this us for XXXX. growth in be a expect We engine to

XXXX, recurring revenue basis prior was XX.X% of points finally, the year. total was up revenue And from XXX for which

the minutes couple despite outcomes a fiscal currency foreign global headwinds, a exchange macro unfavorable delivered to and growth year. few rates take the the a how profitability and in me of XXXX. numerous revenue executed XXXX difficult let year Now, of including during team both discuss from I’m and proud supply of environment key throughout chain

Tools innovative music released initial new several Stage and XX, the important to we Nexis enhancements several and Edge, Composer, requirements shifting NEXIS Media and sound workflows F-series creative for anticipated product market updates XXXX, releases, delivered Studio, creators. highly MBOX addressing plug-in Pro Pre, Carbon options new our users, we In several with picture for including and VENUE subscription, for

to shift while technology our growth we support address challenges objectives. our experienced business for With new this year, have changing past next-generation our to meeting was that customers profitability requirements. the they priority requirements, and user dynamics and and their And continue competitive near-term market and

For in an subscription the XX.X% million, $XXX.X full year-over-year. revenue increase year of was XXXX,

adjustment XX% constant over over year-over-year one-time at the subscription and QX, booked would Excluding year-over-year revenue have XX% in increased currency.

well making before, customers as our as such expectations, momentum Fox, level Global, a as of to in the I the throughout enterprise seen mentioned subscription News, Studios, Films. ITV As performed NFL transition enterprise ahead Paramount high saw of year, subscriptions with for we customers demand Amazon significant

was realized net paid a cloud-enabled subscriptions Creative consistent model XX,XXX tools XXXX, year. saw with which our for software the in right plan. growth line also strategic We in long-term growth our and throughout total additions of

million, for the on a X.X% in XXXX as fiscal constant-currency $XXX.X came an basis. year at measured Total of revenue increase

X% a constant-currency fourth the over adjustment the Excluding one-time total in on have basis. year-over-year revenue would increased quarter,

deliver EBITDA in delivering million, Most basis of importantly, XX.X%, adjusted year-over-year. XXXX, margin and points an XXX to of we increase EBITDA was $XX.X continue improved adjusted profitability

the in year-over-year XX.X% would onetime fourth constant year-over-year the increased adjusted XX.X% and at currency. Excluding quarter, EBITDA adjustment have

our course for $XX.X XXXX. continued and X capital fourth value strategic repurchased year approach million for over the shares to including shareholder purchasing $X.X the shares company we million XXX,XXX finally, quarter. The throughout million, And optimize deployment the to in of

underlying feel confident we'll full may XXXX, our most our during that in and we demand. As to innovations first unfold guidance enter that year, the navigating in situations be global macroeconomic as year need continue proactive carefully market in considered product XXXX. organizations, of to and healthy customer we business performance the have Like we but for quarter drive the

revenues, solutions in our and our of for with market subscription growth new XXXX. deliver subscription for profitability in contribution we We to continued creative and during enterprises see year. from will you continued strength both to anticipate flow As business additional coming cash free expect tools guidance, the

double-digit expect total deliver ARR to in subscription for increase and a both XXXX. sustained revenue We growth ARR subscription and

that will customer business innovations enterprise contribute The growth. flow. In the Tools innovations of the flow in our Creative Pro later and converted stabilize, to contribute to expect customers year exciting I have growth. impact on for business, longer one-third subscription, enterprise In to drive as additional J-curve coming this will our that the continue delivered Enterprise, but music with base Tools this claimed of we've to creation subscription we and that cash we've have mentioned near will term, to summer term will our we transition of cash earlier, ongoing effect free subscription about

continued the top recovery that on situation, seeing of the of we're our live where shipments volume through our from Regarding impacts the in do progress of midyear. anticipate much control and by supply chain impacts supply sound we services, we currently QX, we chain resumed made our of remaining working global

we in progress products that Specifically, Again, guidance. much shipments audio expect into this additional resume we been our the factored second QX. not has additional quarter to volume during do for foresee

investments As long-term but manage growth in innovations structure, digital as cost as new also of efficiency our and in transformation strategic carefully efforts well continue we plan. our remain strategic and improve to always, will we make our our continue to support disciplined

tight in shown near-term long-term we improvements this we team ensure profitability in and and proactively while we've manages past with also the focus deliver As year-over-year growth. years, to speed both few on controls

to we we that to with announced need and new manager that year. drive to continue continued business initiatives, have to our cost our other able music general of last will our program while execute future, including a a to audio we're last infusing voluntary hiring our new management we efficiencies future. retirement develop believe towards We Among and additional talent also solutions new talent skills help organization month, ensure for that

subscription and encounter and In remaining on manage in team's that recurring to proactively on and excited and macro any that execution we continue good innovation, hyper-focused delivering we we I big about have have bets shareholder headwinds have that driving XXXX, development. improving emphasis in our our our profitability also strategic assembled we'll improved may this confidence including proven I'm ability management value. here focus on team talented growth while revenue, continue SaaS. the

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

Ken Gayron

and Jeff, ARR XX.X% quarter. we growth headwind ARR. year-over-year including quarter you, had grew ARR and At a growth Thank XX% Overall, in good our strong currency, year-over-year, with subscription solid XX.X% growth increased FX constant subscription afternoon, was total year-over-year subscription total ARR in as in and the a business, year-over-year everyone. XX.X% in

As nature in Jeff selling the new accelerate correction faster of the we $X.X updated mentioned, with anticipated adjustment in in the that assessing business we price This subscription impacted and Avid SSP assumptions term-based QX XXXX, observable stand-alone and evolving revenue booked at development, to a our in largely to for enterprise methodology million is to for saw is a some our related for negative licenses. that noncash SSP a XXXX. fourth due inputs our for change our of the quarter than The of subscription XXXX and methodology rate this reason for SSP. our

is $X.X of consisting XXXX related XXXX, for $XXX,XXX September periods and XXXX positive basis adjustment in of to ended $X.X change million points X to for negative This months noncash one-time million for immaterial to negative overall XX and an our the This immaterial prior XX, XXXX. represents revenue the represented corrective adjustment as revenue total from XXXX. period of it is onetime terms related

by impact $X.X booked EBITDA were and prior adjustment impacted in our $X.X However, respectively, by XXXX. changes million, million the as it negatively all quarter adversely revenue as results did period QX fourth

non-GAAP high within range. non-cash end at we exclude range EBITDA associated this revenue implied our and onetime EPS and bonus would the the of you when However, and adjustment adjusted delivered the guidance adjustment, have revenue

expected impact and As new factored is results, our to methodology fiscal into guidance. we immaterial to we have our look XXXX this an forward, have XXXX the

assessing even the of Given the value customer that business. strongly for when corrected subscription accounting the reflects more health important ARR, the which maintenance subscription most contract feel growing annualized and methodology, is we agreements metric actual our

are such, investors business. and for subscription to help we evaluate future introducing As trends maintenance Avid’s ARR the guidance

XXXX of turn that, details year quarter now With our the let’s to fourth and results. financial fiscal

encouraged continued are We by our of paid subscription base. the growth

an Our total of subscription the increase million the fourth X.X at XX% exceeded count quarter, end of year-over-year.

approximately exceed creative quarter of subscription in new growth expectations. enterprise subscription our the users and solid was growth subscription Creative XX.X% performance year-over-year. reflecting fourth continued to added We XX,XXX

expanding we version music September introductory Pro Intro, At XXXX, Tools further introduced new and the a creators free aspiring ecosystem. Tools rapidly aimed to build Pro capture

XXX,XXX more increasing we potentially forward. users Intro seen have to We convert to Pro subscriptions than Tools to sign-ups move as pool the of to paid date,

business. grew in subscription. year-over-year enterprise to customer to two subscriptions converted of MediaCentral subscription the years The transition Moving of of confidence existing terms our We have XXX%. representing to the existing an customer believe of professional during of quarter, the during one-third fourth furthers increase first our availability. approximately about enterprise base the our we dollars MediaCentral increase XX,XXX, of XX,XXX growth subscriptions in about in to

of So we still opportunity a have ahead. lot

mix, part our of As become as continues our positively price creative per of business is our multiple seat. is the enterprise a subscription meaningful it to of overall price of the an more a seat price enterprise a impacting seat subscription

constant revenue recurring annualization million based recurring increase $XXX at an subscription Now fourth or year-over-year XX% revenue. maintenance revenue the million of bookings and was recurring and of on – LTM moving currency. Annual $XX XX% revenue to quarter, and annual the year-over-year in

subscription healthy ARR was due subscription of XX% constant convert increased customers as ARR maintenance at customers. XX% subscription add At ARR plus uplifts to growth currency, new year-over-year. to Growth to continue in we

business in Our drive recurring revenue growing greater in results our predictability to margin continues on our focus and time. in improvements gross over

up the recurring long-term revenue ago with As revenue, our XX.X% LTM and fourth of XX% year in was quarter, total of model. line a from

an our the and the in in revenue. look beginning continued during year-over-year for paid subscription components results which drove constant-currency basis. increase with growth fourth a growth of revenue the the quarter, of subscriptions $XX.X number our reached let’s on Now at fourth XX% XX% XXXX, quarter million, of of The consistent the

Excluding XX.X% $X.X revenue XX.X% subscription in the year-over-year adjustment million the revenue year-over-year and of onetime non-cash increased constant at quarter, have currency. would

part be business. continues the solid Maintenance a of to

$XX.X down quarter, During maintenance year-over-year. the fourth revenue million, XX% was

to convert Total revenue maintenance offerings subscription As enterprise in we by constant-currency on continue maintenance X% a to at the customers basis. successfully customers. of subscription and year-over-year our seeing increased X% uplifts in those a excess revenue healthy reduction we from software are fourth quarter in the and XXX%, related

year-over-year constant revenue adjustment have revenue non-cash the XX.X% and maintenance quarter, would subscription at in XX.X% onetime the increased Excluding year-over-year currency. and

In was issues X% other million, $XX.X of the but through during XX% a revenue supply alternative resolve supply, finding chain as quarter, previous quarter selective we solution decrease fourth integrated to year-over-year than and the sources of continued higher redesigns means.

and Total perpetual X.X% fourth up quarter revenue currency. $XXX.X and Total $XX.X services X% in down solutions, fourth quarter. the at year-over-year was professional in million, revenue combined integrated the was million constant

adjustment non-cash at would and have onetime X.X% constant currency. revenue increased total quarter, year-over-year the X.X% Excluding revenue year-over-year in the

at revenue but the gross did overall gross quarter. down in the backlog impact live margin points points at Also, portion We XX.X% points Non-GAAP sound basis one-time and shipping quarter. down by adversely the this our XX basis successful XX gross margins the margin constant currency. QX, were year-over-year of was for a adjustment quarter XXX quarter, our non-cash impacted in for in fourth large the basis non-GAAP

a provide accounting reduced currency as adjustment. by bonus does of our cost Also, decrease were of accrual The operating the a global the $XX.X in result a partial against was quarter non-cash one-time million quarter in the $XXX,XXX expense impact as favorably our million quarter, Non-GAAP fluctuations. operating year-over-year. impacted expenses fourth our base $X.X hedge in FX the

the Adjusted year-over-year. the approximately million quarter, was $XX.X $XXX,XXX EBITDA $X.X revenue in adjusted When was million impacted EBITDA negatively adjusting to impact and for both by in down quarter. FX fourth costs, the

in non-cash at on been been $XX.X quarter. would Excluding adjustment have quarter $X.X the the in the EBITDA would than reported quarter, million in and results constant-currency bonus, have adjusted one-time the million $XX.X EBITDA to revenue the a basis, adjusted and the adjustments higher million the

was $X.XX earnings non-GAAP the FX for $X.XX. quarter, per the revenue down was and both per impact adjusting When fourth costs, in non-GAAP share Finally, share $X.XX year-over-year. to earnings

and bonus $X.XX. earnings the adjustment basis, a EPS quarter, $X.XX. non-cash Excluding revenue have share on have constant-currency And in non-GAAP one-time would been adjustment per non-GAAP the would been

our let’s for the the Next, revenue. XXXX, with look results of at full components year beginning our

the year, basis. and full For on million, subscription was year-over-year up XX% revenue $XXX.X constant-currency a XX%

revenue non-cash quarter, and revenue year-over-year one-time adjustment constant the the subscription Excluding in XX% fourth at currency. year-over-year increased XX%

is full maintenance long-term year-over-year. year, For a in at XX% XX% XX% line year with down $XXX.X the and saw and the currency, Subscription million, for which revenue growth constant maintenance revenue full XXXX was plan. our

Excluding at fourth subscription revenue currency. the in the increased constant maintenance quarter, year-over-year have one-time year-over-year non-cash revenue and XX.X% FYXXXX and XX.X% adjustment would

million perpetual related XXXX, supply deemphasize was in the XXXX, year-over-year $X.X our year of headwinds license and licenses decrease down continued due $XX.X million revenue parts to or business. revenue as we X% was strategic year certain million Perpetual $XXX.X XX% a year-over-year chain to for Integrated subscription the audio revenue. of full to focus on solutions full

a quarter, ended continue we XX/XX/XXXX. anticipated, the see orders. improvements result, certain as year at of And over we in chain our are backlog million supply resolve we with the $XX we backlog to Although as issues, in as seeing strong

X% currency. Total $XXX.X X% million, revenue XXXX full up constant the was year-over-year year at and for

one-time year-over-year fourth in X.X% X.X% quarter, Excluding revenue have the would total at constant increased and revenue the currency. year-over-year non-cash adjustment

for low the would we revenue one-time range end have we this revenue reported, you end at As delivered when the in our range but exclude high the guidance of of non-cash revenue, were adjustment.

the to rest P&L of turn year let’s for full the the Now XXXX.

drive as a Our margin was XX.X% a compared and business controls revenue. revenue, strategy points sustained our margin XX in year, together XXXX of larger share of subscription up innovation continued profitable with our higher gross resulted expansion effective high-margin for to of growth. to Non-GAAP trend recurring in has investing up the made cost basis quality

continue We continues mix. as gross to long-term of subscription to in our improving bigger business piece our margin overall model be expect our a

and non-cash $XXX.X $X.X revenue currency. XXXX. XXXX, the increased quarter, XX.X% one-time expenses XXX the margin revenue year-over-year million operating for million of points the were a XXXX, in in from adjustment constant would Non-GAAP Excluding have Non-GAAP XX% XXX revenue year basis basis in were at increase full of gross operating points non-GAAP year-over-year. down expenses

XX.X% year the impacted gross full impact adjusted and was the by EBITDA and in adjusting revenue improvement in adjusted by to for revenue at the $XX.X currency. and FX resulted margin. up When the was growth would million both For million, constant EBITDA X.X%, $X.X non-GAAP XXXX, driven negatively both have in costs, year a

one-time non-cash increase a bonus ended the have basis, And year-over-year. year-over-year. with Excluding of have quarter, of been net $XX.X fourth EBITDA million, times. been revenue an EBITDA X.X We adjusted the associated XXXX debt XX.X% adjusted in position of to XX% would an strong adjustment in the would financial $XX constant-currency adjustment and EBITDA million, a on increase

for cost, operating per non-GAAP would both during earnings revenue $X.XX. year Finally, impact share XXXX. FX the been and adjusting share full non-GAAP up per income improved was the When for XX.X%, reflecting the have year, earnings $X.XX to

non-cash have $X.XX, share fourth increase an non-GAAP constant quarter, revenue of year-over-year, Excluding would of an and in XX% one-time year-over-year. adjustment and the the earnings adjustment XX% $X.XX, currency, bonus at increase been per

of quarter cash QX the the working the the a million and timing receivables Free of $XX.X quarter smaller end $X.X to Now capital due was flow compared billings to collections XXXX. flow. of at moving as of free down million to cash were our from fourth at the quarter, more quarter’s year-over-year in of end contribution

year flow $XX.X For was the free XXXX, full cash million.

free flow the account The versus in XXXX. generated following XXXX our in change cash for factors

investments primarily and strength exchange use positive and note, cash capitalized enterprise working of First, from temporary prepaid growth and from timing XXXX, a expenditures to EBITDA plan. rates; adjusted unfavorable XXXX foreign long-term development in to second, and capital on our higher subscriptions; offset DTI enterprise in cash in XXXX software multiyear support expenses third, to by of related higher capital due in our greater subscription billings

cash conversion is Free free XXXX. restructuring, full improving management EBITDA from XXXX. Avid’s on year for cash its cash XXXX. flow the of adjusted adjusted $XX.X focused costs as conversion was was Free in exclusion cash flow, for for million flow in XX%

We will overall flow growth subscription drive continue we revenue, to initiatives invest we’ll other but investments improve XXXX. very to management in in look in reduce areas to be prudent to expense our as cash in our free

expect we we along Also, a improvements XXXX, be should of more cash our in free the profitability. benefit working in capital to which assist with flow, see

the We of costs and expect in million of to the guidance reflect incur year, costs. $X will our those restructuring add-back

we to actions continue execute enhance to Finally, shareholder long-term corporate value.

shares per repurchased average share. reflecting fourth for we price $X.X the quarter, million, of During $XX.XX an XXX,XXX

full an we X.XX of $XX.XX for shares million year For XXXX, share. repurchased average $XX.X per million, reflecting price

repurchased also of Additionally, shares for or total we X.X XX, through the September million announced bringing the $XX.X shares $XXX,XXX, authorization repurchase February first XXXX. in under XXXX quarter during XX,XXX million million the to $XXX

long-term We the to responsible prudently will to value. in way deploy continue most drive capital shareholder

turn to Let’s now guidance.

we business, our solutions for including in the underlying Jeff said, our in As we healthy the demand strength are confident seeing. that are

enterprise our performance tools strong creative revenue in growth from and our expect We solid business. in continued continued subscription subscription

time. a also integrated more our meaningful solutions quarter reduction beginning backlog improved to we We performance in expect of at see the that as in in expect our XXXX second

rates a the Before euro-USD pound-USD exchange our assumption rate and guidance a FX of rate is on through numbers, exchange I of X.XX:X. X.X:X go

of is guidance to guidance at $XXX the quarter XXXX, end ARR for of $XXX our million million. terms In the the for period first of

million. guidance assumes QX integrated XXXX. a at as chain in our of QX of resolving to backlog the guidance $XXX For solutions our be improvement for backlog this ultimately our remaining time, $XX first of in we will converting we in revenue issues small in to and QX and XXXX, supply the quarter QX revenue is total million Overall, believe, orders

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

Our guidance million is for to $XX XXXX adjusted quarter first EBITDA million. $XX

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

the also At guidance this full for time, are XXXX. providing we year

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

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

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

guidance cash XXXX for for is XX.X XXXX And as $X is for restructuring. guidance Our EBITDA earnings guidance million, to outstanding. $XXX which $XX assuming million $X.XX adjusted non-GAAP million million XXXX million is includes our cash And $X.XX, $XX share shares our per flow to adjusted million. $XX to free in

restructuring the cash cost. and slightly rates higher reflects higher Our in and working XXXX flow to profitability guidance higher the cash improvement improvements free due in capital, offset by cash base costs interest

With to the call back Whit. to turn that, like I’d

Whit Rappole

our That Jeff. Right. happy to and you, Ken. questions. now prepared we Thank you, Thank are concludes remarks, take

Our Samad Josh Josh, be Samana. followed by to is first from Nichols at Riley ahead. question B. go please

Josh Nichols

or my for was a the taking adjusting like little after the better onetime line question for Thanks walking Yes. adjustments, in everything items. it seems bit non-cash and through

though, in forward either change what for you or other just adoption of soft cycle kind people a enterprise a of the with I’m have I seen big companies environment. that’s have any Looking within tech new a know the reported given curious, market? macro of the lot sales concern prosumer

Jeff Rosica

question, Josh, this is Jeff. and Good

guidance, into and this taken very – it’s, been our we our I have it’s that still I very consideration. say set I I out in what remarks, said as I’d from my careful prepared think, and it’s landscape, solid. guidance we at So, seen looked in for we’ve have we’ve you’ve still think think very XXXX, so

I seeing a think overall, we’re change. significant not

to careful guidance cycles subscription lot a course, our down it assumptions customers, benefit being of and But far, seeing bit, and little XXXX. solutions. move we for is about some little We’re for in really the and of sales the move to good think I a them a a have our real modeled momentum to slow seen to of so bit we’ve

I So, we’ve before. talked about this think

we’re subscription see to more going strongly. We business. I perform, that think that again, will on continue we’ve may which Though, hardware business factored investment see this our our less very hurts really capital little year, software into to I guidance. think, our

Josh Nichols

Thanks.

year we in-line adoption, using more I mentioned AWS the cloud want back things subscription through a with as that but here. bit $XX on. for working other year, you for things that into backlog, a conservative there? of little plan summer, that seem upside potential commercialization storage, million like particularly step I there you’re think outlook later like take even what’s later things like though opportunities on know but as turns to kind about you on this So, factored Is this this year,

Jeff Rosica

Well, think on pretty been carefully. anything conservative for We’ve industry the we’ve I SaaS. assumptions fairly our on seen Yes. SaaS, migrate

we’re subscription to quick later in Our software that. year. They SaaS, is thing. move this all onboard been very one can coming They was that where serving to in software-as-a-service have real cloud. up That the

we’ve that some what about And we’ve we’ve in. in, Josh, modeled been careful very of but so, modeled

some there’s upside. hope I So,

how the we’ve we’ve think pretty that moment, think in speak been I modeled later, prudent that. to we’ll I but at

opportunities going as customers. So, to great I forward converting in be we think there’s some look

Josh Nichols

And last me. for Great. question then

did enhancing You a Tools. that it right, and finish that differentiate long-term Pro the fully had how opportunity, you’re little could of long about for How Media with you that what’s the last that, month, now from release take about to you peers? talk bit fills? how a gap press you interoperability the Composer your Could

Jeff Rosica

– good a good Josh. very That’s question,

three we’re So, the horizons have on We there. the just first actually work it deliverable. three phases call that in the or work doing is we

much Avid have of this these the elements sound video lot a the media, end productions the Media of world is producing or the in there’s faster of workflow back in especially TV pretty work and film they both which the how and a editing shows sound, they’re a as today’s they that portion, thing the one just it’s which of a of of at picture of lot first is TV is show. work film and increased, as all, lot high lot and working, Tools in do. and industry is, is more that complexity forth lot Composer films, and a intense picture complexity TV media, standard with of elements So between with deliverables But what or Pro audio in

strength, we is, So, because think, and create going these ways how programs. innovating company we us together strong position we and customers they this position customers be the also TV areas such in production we create differentiate with what us, in new for as together two space clearly ARPU work cement a through film we between uniquely points does have how this two as of on these forward. are the these our in doing I this I we’re opportunity, products higher the we It in new It and to, solving continues work important a of for innovation. as But some to higher markets. look or generating will space think, high-end be from at very problems strong pretty these price

come started prices yet. in those haven’t value as and bring they want to to developing of market, will up or value markets in then getting substantially We are those they’re cost efficiencies savings up more it. see own to to to benefiting prices We that and customers, from we that we’re those delivering we’re innovations these their that be the looking of bring

it phase in X as the has As This done. far phases, already Horizon horizon launched December. was the was as we first been call

an don’t is be second fully horizon but with And will public we the coming I for it next year, date, haven’t early but plan exact third that. gone have mid The horizon this we year. this summer.

Josh Nichols

Thanks, everyone. mic. the pass I’ll

Jeff Rosica

Okay. Josh. Thanks,

Whit Rappole

to would to that follow-up, be limit Thanks people themselves great. just Josh. one ask I could If

Nehal Samad next to at Samad, is followed ahead. Chokshi. Jefferies Our be by from Samana question go please

Jeremy Sahler

guys. Hey, Sahler on Samana. for This is my questions. Thank for Jeremy you taking Samad

Jeff Rosica

Jeremy. Hi,

Jeremy Sahler

we great should mindful it’s great there see How be that new should new Are we hey, it’s that about going of guidance. of? forward? any So, – think that seasonality to see trends to ARR net the ARR

Ken Gayron

Yes.

in our our part of cycle in just the So, business. I of think because QX, strongest of strongest is renewals usually general in maintenance that’s that terms typically enterprise ARR our seasonally drive

that year. So periods higher that’s in versus the expect would growth in you earlier quarter where

expect year. we what So and that year this saw next that’s

Jeremy Sahler

Got it.

quarter previous sized you I impact versus how ARR net relative new is of quarters enterprise customers the this think on trending? and that

Ken Gayron

Yes.

growth the subscription we bounce but XX% was puts look that ARR our the piece So positive ARR in enterprise to in grew terms of we up of XX% at the the look trend, was we as trend’s which low-XXs, of in growth. ARR. our sure, rate, ARR very terms at When closer the Subscription XX%. growth, to XX%, creatives

Jeremy Sahler

Thanks my for taking Understood. questions.

Ken Gayron

pleasure. My

Whit Rappole

Thanks, Jeremy.

at there? are be question Paul Chokshi Nehal, by please Nehal, go to Chung. you ahead. next from is Northland Our Nehal followed

Nehal Chokshi

I’m me? hear here now. you Can

Whit Rappole

can we now. Yes,

Nehal Chokshi

Perfect, great.

know creative So, already answered XX,XXX. out you came this. may at I [ph] in have pointed net you adds that

XX,XXX net step net that’s that? pretty on big from the behind What’s creative think down the of I quarter adds. prior add narrative a

Jeff Rosica

a we performed SKUs. talked bit see the really pullback lower Media heavily some about education. priced quite a see and of Sibelius on remarks. It lower bit We Sibelius, prepared during net Jeff. pullback number we was did was quite I bit pull quarter. really Nehal. may bit a Its thousand I in we Pro few saw of a SKUs. come pullback back around around our we that Yes, in back, hi, Tools, on of of about students the that adds a – SKUs, the saw that But a It that but priced priced this lower a the added It a on talked was for Composer the my quarter. area. creative well

that, Sibelius that you’re that around was the So headwind still quarter. for we the very is even seeing – with product really favorable really But from had line. revenue subscription Sibelius

Nehal Chokshi

Q-on-Q, lower student within the Just to due down mean actually the these subscribers to be you clear, priced that section? Sibelius SKUs was

Jeff Rosica

significantly. of was number adds The net down

Ken Gayron

in we total priced quarter, the versus grow growth in at quarter. obviously you said, total Sibelius. with revenue for of net the revenue Jeff prior we as It’s – SKUs still growth. the strong ARR and grew when in slowed growth terms the And it’s and of So, in look lower still Sibelius, just terms the adds rate it very subscription was

So, the a again, that still had deceleration, we priced these growth. SKUs lower had are but

Jeff Rosica

is And Nehal, Jeff. this

you compared of QX is because sequential. subscriptions and turn QX was number big a sequential before There’s a between the QX on for clear, always quarter education. be difference Just for

at as look quarter-on-quarter last at related you to QX year, strong that Sibelius. but look still as it’s really not QX quite So, perspective, if is we last but year,

Nehal Chokshi

Understood.

Okay. annualized the And is what expectation creative then, adds on basis then? net for your an

Ken Gayron

– were in positive trending how where year. in the obviously looking we’re terms of we’re we to obviously – last QX so we’re Yes,

we’re shape. already in starting off So good

expect to So, should going adds have or area. creative I we similar long-term our is big to growth XXX,XXX double-digit say, long-term well adds year, total to last having, of be right drive that to year we that and what chunk which terms subscription positive would plan in growth. that have plan adds are enterprise. of And XX,XXX be Creatives as QX in to per continue last to is, of of year net our in will as a

QX the plan our what XXXX. terms of and in already QX long-term that’s already So through is seeing on trends that we’re is, of kind model

Nehal Chokshi

the so thank Great, back I queue. you. follow-up get that’s guess my in question, Hey, I’ll

Jeff Rosica

Thanks, Nehal.

Ken Gayron

Nehal. Thank you,

Whit Rappole

Thanks, Nehal.

go followed by Paul, is Paul be Aarde. ahead. JPMorgan question next to Vander Jack please Our Chung from at

Paul Chung

my Hey, thanks for questions. taking

as expansion, breakout some just gross (X:XX:XX)? margin margins So some revenue XXXX Could progression kind pace across suggesting past about for and expansion margins talk your here and provided of guide targets can $XXX [indiscernible] the seen and Your see XXXX? you've is here you relative low in upside the of kind to of in revenues in long-term to you you operating both million have EBITDA well. from XXXX margins a

Ken Gayron

Yes.

growth, ended good we a about, as very of guide bookings balanced strong out we So in the We and we feel well it's QX really terms first, quarter. put that we there. think have –

general We've see high-single-digit in in talked XX%. Investor think, in earnings growth the about I Day, at we growth.

plan the of beat And growth slightly QX XX%, that long-term the growth of that with that So, model. model. terms in we're then, in terms our was long-term business, long-term and in over model, of on actually subscription aligned

strong very aligned to subscription year expect model. subscription the to with next and have maintenance nicely, We and growth grow our business very long-term

talked growth and we So, about what mid-teens we that's see.

us, solid we have is front the of creative one-third growth enterprise think have converted. business great grow a of in and I we customers continues that So, to the

So terms well us sales ahead team the incentivized our that, and is opportunity achieve targets. in of driving is those very to of

then challenges, in resolved integrated to but revenue come sure, solutions, some year that was this net and then on mainly And we QX. with expect the there the and to QX, QX backlog be in

growth. seen recovery would margin and business, We've the both a solutions progression. drive subscription Every year-over-year and So, margin. to solid the in integrated will in that in progression say I business strong complement growth we the XX% our gross margin maintenance EBITDA year, expect and on

we As we That's improvements as XXX go we drive subscription in the that's in generate transition. margin should basis per you what and model what look have points expect business, our generally usually long-term achieved we modeled plan, we the business forward. back gross year, as what of that's we've

are of investing for cost in the then to we're areas but of very on prudent we terms management, And other top business. growth drive that line,

does margin. margin drive in improvement, result we as improvement EBITDA that gross So in

the about should our talk the EBITDA guidance. low-XXs see we in into margins get So as we

revenue about ultimately business, the we that that ahead the So us opportunity and will that that coming given expansion growth growth we of and profitability. drives margin from feel really where is good subscription drive the in our expect, the

Paul Chung

Great. this lower seeing get that Thanks. assume cash just working could better Okay. you're then, of And year. cap flow, projection in because I you see I super That was helpful. some where kind you would turnover on mean, here the upside guide, conversion some to

that Is could you as cost? in Thank see the the what's restructuring where that? included – guide Is driving you. cash free cash upside So well? that that offsetting in

Ken Gayron

Yes.

improved a drive expect collections of years in we free business to improve is to expect of terms built multiple the be of because that headwind year, to less we of continue of we but cash So, as up. cash coming flow capital profitability, only and this enterprise flow working

guidance have. working expect be and capital less feel I this we good So a in we think we year, that to of about general challenge the

of million the as $X provided the restructuring in of we In that the our is part terms so of guidance, guidance. restructuring, have

million expect include to we $XX and million in $X restructuring when you flow. million cash So, $XX that

Paul Chung

you. Thank

Whit Rappole

from Thanks, go ahead. please Jack Maxim. Paul. Jack, And Vander our comes Aarde final question at

Jack Vander Aarde

ask I two of kind loaded enterprise just most my make questions just taking for Okay. time. kind of the Great. the I'm to to Thanks. going update, my guys. appreciate the Thanks of questions. on subscription

if versus You existing – of mentioned question. seats enterprise one-third versus you've Wondering about your or conversions you're to enterprise subscription Avid new enterprise subscription. enterprise customers customers out split of customers to parse existing That's that to customers? sort that one new converted between able altogether expanding

I seats? does new agreement secured. how And follow-up the of And that XX-plus to subscription mean exactly? quarter? relate then about that have X that number does number the what What on the enterprise of Slide And a presentation was last Thanks.

Jeff Rosica

Good Yes. question, Jack.

– on where are. the about the we question really So

you I loaded of couple in So actually, there. elements different think, a

converting subscription them is, one with perpetual we existing to when where license are model, those may talk a subscription converting first enterprise an customers a we're conversions, and we're on The be about who model. maintenance – uplift

on transition, so the that about we're And XX% through customers.

in larger Now of dollar customers. a customers lot the early the days some are of

customer the and But talking we're wider the going is deeper conversions base about one-third, we we of we when forward. as XX% go obviously – about we – into get as talk base, move or about – customers. as So the we're customer the here that through

tell any it's quarter to about we the I exact business, the have do XX% can't say a coming on assumption have we've have. be for would that got today, number also on business around for you into generally, new new board XX% subscription, our and customers our piece And any here business, but is our I of would I the you customers that, but give is given in to customers I like new the coming coming We think year. company same

Now asked also or expansions. you about upgrades

and the – the – a throughout those December of few really December when is of to XXXX leaning We continue where – to of is have subscription. done as we with major we'll customers, remember see get December enterprise into year. quarter started couple we XXXX But a December this some this really that started to we already quarter, expansions

But as expand So coming. upgrade And expansions We've we that's – significant done several where doing we'll see believe some we'll are of the improved big with economics so we customers. we way and the along start will renewals people. far. see

what's see, ask So going generating make is business we've customers? were the to about the sense. of the we done if far, what you that overall, mix that And

Jack Vander Aarde

quarter, disclose think Yes. was you new, it's have in terms enterprise – Very – What it helpful X, last provide the color you that Do have I amount? agreements there. And if number in there's XX quarter. on of – do that? Or Slide hand? disclosed. you've on yes, is then, new the XX-plus number that And then a you you I'm what is do not total sure is subscription

Jeff Rosica

Yes.

us So and top agreements, around different and that to XX don't allow them. generally, are I'm the agreements customer confuse of my my – and But but signing, made varying we named that small world. large sizes when But going a the world. we're head of we've some and to I all We them of they name remarks. these and off are XX the have just medium only they're companies in the make broadcasters customers, all mistake name them are we've that some And these and quarters. look because new these up generally customers year done name don't around production throughout companies types so I them media the number,

maintenance we as and that be quarter, mid-XXs quarters. say we our QX QX In Ken used QX the were biggest strongest number the always the said gave. to we business, last QX our believe said, is I going quarter. is in to

we've think year. always really is people pattern there definitely outlier. QX, But the going be a seen a It's we've as subscriptions QX QX through going to see upgrade to far is be major to I different what we able as to quarter. an where throughout been

more to as and So seasonal between quite QX used it as little and it's QX be. not a even

Jack Vander Aarde

guys. you color. Thank helpful Very

Jeff Rosica

Jack. Thanks,

Whit Rappole

join your to good Thank we you appreciate all earnings and you Thanks, call, Jack. Q&A That for taken session. participation ends everybody evening. hope and We the has your time Thank you've questions. wonderful night. a again, the and today's us on

Avid Technology (AVID) 1 Mar 232022 Q4 Earnings call transcript