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Intralinks Announces Fourth Quarter and Full Year 2013 Results

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SOURCE Intralinks Holdings, Inc.

NEW YORK, Feb. 25, 2014 /PRNewswire/ -- Intralinks Holdings, Inc. (NYSE: IL), a leading, global SaaS provider of inter-enterprise content management and collaboration solutions, today announced results for its fourth quarter and full year 2013.

"We had a number of key achievements in 2013," said Ron Hovsepian, Intralinks' President and CEO. "We returned the company to growth with an 8% revenue gain for the full year, continued to take share in the M&A market and launched Intralinks VIATM, a major new enterprise collaboration offering. I look forward to continued progress in 2014 on all fronts, with double-digit enterprise backlog growth by the end of the year as a key milestone."

Fourth Quarter 2013

Total revenue was $62.6 million, compared to $57.4 million for the corresponding quarter last year.

  • M&A revenue was $31.2 million, compared to $26.2 million for the corresponding quarter last year.
  • Enterprise revenue was $24.5 million, compared to $24.2 million for the corresponding quarter last year.
  • DCM revenue was $7.0 million, compared to $7.0 million for the corresponding quarter last year.

GAAP gross margin was 72.6%, compared to 73.1% for the corresponding quarter last year. Non-GAAP adjusted gross margin was 76.0%, compared to 76.8% for the corresponding quarter last year.

GAAP operating loss was ($4.8) million, compared to ($1.7) million for the corresponding quarter last year.  Non-GAAP adjusted operating income was $3.1 million, compared to $6.2 million for the corresponding quarter last year.

GAAP net loss was ($3.8) million, compared to ($1.5) million for the corresponding quarter last year.  GAAP net loss per share was ($0.07) on the basis of 55.4 million shares outstanding. In the corresponding quarter last year, GAAP net loss per share was ($0.03) on the basis of 54.5 million shares outstanding.

Non-GAAP adjusted net income was $1.5 million, compared to $3.2 million for the corresponding quarter last year. Non-GAAP adjusted net income per share was $0.03 on the basis of 57.3 million shares outstanding. In the corresponding quarter last year, non-GAAP adjusted net income per share was $0.06 on the basis of 55.1 million shares outstanding.

Non-GAAP adjusted EBITDA was $8.8 million, compared to $11.2 million for the corresponding quarter last year.

Full Year 2013

Total revenue was $234.5 million, compared to $216.7 million for the prior year.

  • M&A revenue was $110.5 million, compared to $91.6 million for the prior year.
  • Enterprise revenue was $95.2 million, compared to $94.6 million for the prior year.
  • DCM revenue was $28.8 million, compared to $30.4 million for the prior year.

GAAP gross margin was 72.3%, compared to 71.2% for prior year. Non-GAAP adjusted gross margin was 76.1%, compared to 76.2% for the prior year.

GAAP operating loss was ($15.9) million, compared to ($22.3) million in the prior year.  Non-GAAP adjusted operating income was $16.0 million, compared to $18.8 million for the prior year.

GAAP net loss was ($15.3) million, compared to ($17.4) million for the prior year.  GAAP net loss per share for the year was ($0.28) on the basis of 55.1 million shares outstanding. GAAP net loss per share for the prior year was ($0.32) on the basis of 54.4 million shares outstanding.

Non-GAAP adjusted net income was $7.0 million, compared to $8.4 million for the prior year.  Non-GAAP adjusted net income per share was $0.12 on the basis of 56.3 million shares outstanding. Non-GAAP adjusted net income per share for the prior year was $0.15 on the basis of 54.9 million shares outstanding.

Non-GAAP adjusted EBITDA was $36.9 million, compared to non-GAAP adjusted EBITDA of $37.3 million for the prior year.

Cash flow from operations was $42.0 million, compared to $35.2 million for the prior year.

Cash, restricted cash and investments were $87.9 million at December 31, 2013 compared to $75.3 million at the end of 2012.

On February 24, 2014, the Company refinanced its existing term loan credit facility with an $80 million, 5 year term loan B credit facility. The term loan bears interest at LIBOR, with a 2% floor plus 5.25% per annum, for an effective interest rate of 7.25%. There is a 0.25% principal payment due on the last day of each quarter, commencing on June 30, 2014, with a balance due in a final installment on February 24, 2019. In addition, the lenders have provided for a $10 million asset-based revolving line of credit.

Business Outlook:

Based on information available as of February 25, 2014, Intralinks is providing guidance for 2014 as follows:

First Quarter 2014

Revenue: $56 million to $58 million
GAAP operating loss: ($8.6) million to ($7.1) million
Non-GAAP adjusted operating income: ($0.5) million to $1.0 million
Non-GAAP adjusted EBITDA: $5.5 million to $7.0 million
GAAP net loss per share: ($0.12) to ($0.10)
Non-GAAP adjusted net income per share: ($0.02) to ($0.00)

Full Year 2014

Revenue: $238 million to $246 million
GAAP operating loss: ($20.5) million to ($16.5) million
Non-GAAP adjusted operating income: $12.0 million to $16.0 million
Non-GAAP adjusted EBITDA: $38.0 million to $42.0 million
GAAP net loss per share: ($0.31) to ($0.27)
Non-GAAP adjusted net income per share: $0.06 to $0.11

Quarterly Conference Call

Intralinks will host a conference call today at 5:00 p.m. Eastern Time (ET) to discuss the company's fourth quarter and full year 2013 financial results and other corporate developments. To access this call, dial 877-300-8521 (domestic) or 412-317-6026 (international). A passcode is not required. This presentation will also be webcast live on the investor relations section on the Intralinks website at www.Intralinks.com/ir.  In conjunction with this call, there will also be accompanying slides with supplemental information available at the same website location.

Following the conference call, a replay will be available until March 4, 2014, at 877-870-5176 (domestic) or 858-384-5517 (international). The passcode for the replay is 10039877. An archived webcast of this conference call will also be available on the investor relations section on the Intralinks website at www.Intralinks.com/ir.

About Intralinks

Intralinks Holdings, Inc. (NYSE: IL) is a leading, global technology provider of inter-enterprise content management and collaboration solutions. Through innovative Software-as-a-Service solutions, Intralinks solutions are designed to enable the secure and compliant exchange, control, and management of information between organizations when working through the firewall. More than 2.7 million professionals, including professionals at 99% of the Fortune 1000 companies, have depended on Intralinks' experience. With a track record of enabling high-stakes transactions and business collaborations valued at more than $23.5 trillion, Intralinks is a trusted provider of easy-to-use, enterprise strength, cloud-based collaboration solutions. For more information, visit www.Intralinks.com.

Non-GAAP Financial Measures

This press release includes information about certain financial measures that are not prepared in accordance with generally accepted accounting principles in the United States ("GAAP" or "U.S. GAAP"), including non-GAAP adjusted gross profit and non-GAAP adjusted gross margin, non-GAAP adjusted operating income, non-GAAP adjusted net income, non-GAAP adjusted net income per share, non-GAAP adjusted EBITDA and non-GAAP adjusted EBITDA margin and free cash flow. These non-GAAP measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies.

Management defines its non-GAAP financial measures as follows:

  • Non-GAAP gross profit represents the corresponding GAAP measure adjusted to exclude, if applicable: (1) amortization of intangible assets, and (2) stock-based compensation expense.
  • Non-GAAP adjusted operating income represents the corresponding GAAP measure adjusted to exclude, if applicable: (1) amortization of intangible assets, (2) stock-based compensation expense, (3) impairment charges or asset write-offs and (4) costs related to public stock offerings.
  • Non-GAAP adjusted net income represents the corresponding GAAP measure adjusted to exclude, if applicable: (1) amortization of intangible assets, (2) stock-based compensation expense, (3) impairment charges or asset write-offs, (4) costs related to debt repayments and (5) costs related to public stock offerings.  The income tax expense included in non-GAAP adjusted net income is calculated using an estimated long-term effective tax rate.
  • Non-GAAP adjusted net income per share represents non-GAAP adjusted net income (which is defined above) divided by fully diluted weighted average shares outstanding.
  • Non-GAAP adjusted EBITDA represents net loss adjusted to exclude, if applicable: (1) amortization of intangible assets,  (2) depreciation and amortization,  (3) stock-based compensation expense, (4) impairment charges or asset write-offs,  (5) interest expense,  (6) amortization of debt issuance costs, (7) other expense (income), net, (8) costs related to public stock offerings and (9) income tax (benefit) expense.
  • Free cash flow represents net cash provided by operating activities less capitalized software development costs and capital expenditures.

Management believes that these non-GAAP financial measures, when viewed with our results under U.S. GAAP and the accompanying reconciliations, provide useful information about our period-over-period growth and provide additional information that is useful for evaluating our operating performance. In addition, free cash flow provides management with useful information for managing the cash needs of our business.  Management also believes that these non-GAAP financial measures provide a more meaningful comparison of our operating results against those of other companies in our industry, as well as on a period-over-period basis, because these measures exclude items that are not representative of our operating performance, such as amortization of intangible assets, interest expense and fair value adjustments to the interest rate swap that matured on June 30, 2012. Management believes that including these costs in our results of operations results in a lack of comparability between our operating results and those of our peers in the industry, the majority of which are not highly leveraged and do not have comparable amortization costs related to intangible assets. However, non-GAAP adjusted gross profit, non-GAAP adjusted operating income, non-GAAP adjusted net income, non-GAAP adjusted net income per share, non-GAAP adjusted EBITDA and free cash flow are not measures of financial performance under U.S. GAAP and, accordingly, should not be considered substitutes for or superior to gross profit, loss from operations, net loss, net loss per share and net cash provided by operating activities as indicators of operating performance.

Reconciliations of GAAP to Non-GAAP financial measures are included in this press release.

Forward Looking Statements

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  This press release contains expressed or implied forward-looking statements that are not based on historical information relating to, among other things, expectations and assumptions concerning management's forecast of financial performance, future business growth, and management's plans, objectives, and strategies. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things:  the uncertainty of our future profitability; our ability to sustain positive cash flow or to attain our enterprise backlog objectives; periodic fluctuations in our operating results; our ability to manage our expected growth; risks related to our substantial debt balances and our ability to generate or obtain sufficient capital to service our debt and fund our business; our ability to maintain the security and integrity of our systems; risks associated with the privacy and protection of information in our possession; our ability to increase our penetration in our principal existing markets and expand into additional markets; our ability to expand into new geographic markets; delays in market adoption and penetration of our products and services; difficulties developing, integrating and introducing new products and services; our dependence on the volume of financial and strategic business transactions; our dependence on customer referrals and relationships; our ability to maintain and expand our direct sales capabilities; our ability to develop and maintain strategic relationships to sell and deliver our solutions; customer renewal rates and attrition; our ability to maintain the compatibility of our services with third-party applications; competition and our ability to maintain our average sales prices; our ability to adapt to changing technologies; interruptions or delays in our service; international risks; uncertainties surrounding domestic and global economic conditions; our ability to protect our intellectual property; costs of being a public company; and risks related to changes in laws, regulations or governmental policy, including data privacy and tax regulations. Further information on these and other factors that could affect our financial results is contained in our public filings with the Securities and Exchange Commission (the "SEC") from time to time, including our Annual Report on Form 10-K for the year ended December 31, 2012 and subsequent reports.  Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

Intralinks undertakes no obligation to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances or otherwise.

"Intralinks" and the Intralinks logo are registered trademarks of Intralinks, Inc. "Intralinks VIA" is a trademark of Intralinks, Inc. © 2014. All rights reserved.

 

Intralinks Holdings, Inc.
Consolidated Balance Sheets
(In Thousands, Except Share Data)
(unaudited)




December 31,



2013


2012

ASSETS





Current assets:





Cash and cash equivalents


$

50,540



$

43,798


Accounts receivable, net of allowances of $3,152 and $2,927, respectively


38,322



37,667


Investments


34,886



31,549


Deferred taxes


12,148



7,469


Prepaid expenses


6,036



5,474


Restricted cash


2,442



-


Other current assets


4,576



3,518


Total current assets


148,950



129,475


Fixed assets, net


14,100



10,645


Capitalized software, net


32,341



26,295


Goodwill


215,869



215,478


Other intangibles, net


83,648



106,750


Other assets


1,054



1,111


Total assets


$

495,962



$

489,754


LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





Accounts Payable


$

11,052



$

4,451


Short-term debt


209



1,030


Deferred revenue


44,651



40,719


Accrued expenses and other current liabilities


26,667



20,320


Total current liabilities


82,579



66,520


Long-term debt


75,004



75,238


Deferred taxes


16,989



21,135


Other long-term liabilities


5,289



4,809


Total liabilities


179,861



167,702


Commitments and contingencies (Note 16)





Stockholders' equity:





Undesignated Preferred Stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding


-



-


Common Stock, $0.001 par value; 300,000,000 shares authorized; 56,054,484 and 55,486,651 shares issued and outstanding, respectively


56



55


Additional paid-in capital


429,549



419,618


Accumulated deficit


(112,714)



(97,436)


Accumulated other comprehensive loss


(790)



(185)


Total stockholders' equity


316,101



322,052


Total liabilities and stockholders' equity


$

495,962



$

489,754


 


Intralinks Holdings, Inc.
Consolidated Statements of Operations
(In Thousands, Except Share Data)
(unaudited)




Three Months Ended
December 31,


Years Ended
December 31,



2013


2012


2013


2012

Revenue


$

62,617



$

57,364



$

234,496



$

216,667


Cost of revenue


17,176



15,419



64,885



62,354


Gross profit


45,441



41,945



169,611



154,313


Operating expenses:









Sales and marketing


29,118



25,539



108,428



96,198


General and administrative


15,362



11,796



57,063



50,608


Product development


5,778



6,019



20,014



21,092


Impairment of capitalized software


-



338



-



8,715


Total operating expenses


50,258



43,692



185,505



176,613


 Loss from operations


(4,817)



(1,747)



(15,894)



(22,300)


Interest expense


620



1,190



4,136



6,435


Amortization of debt issuance costs


71



149



358



740


Other (income) expense, net


(67)



(392)



239



(1,870)


Net loss before income tax


(5,441)



(2,694)



(20,627)



(27,605)


Income tax benefit


(1,592)



(1,185)



(5,349)



(10,225)


Net loss


$

(3,849)



$

(1,509)



$

(15,278)



$

(17,380)


Net loss per common share









Basic


$

(0.07)



$

(0.03)



$

(0.28)



$

(0.32)


Diluted


$

(0.07)



$

(0.03)



$

(0.28)



$

(0.32)


Weighted average number of shares









Basic


55,412,671



54,533,774



55,135,657



54,352,536


Diluted


55,412,671



54,533,774



55,135,657



54,352,536


 

Intralinks Holdings, Inc.
Consolidated Statements of Cash Flows
(In Thousands)
(unaudited)





Years Ended  December 31,



2013


2012

Net loss


$

(15,278)



$

(17,380)


Adjustments to reconcile net loss to net cash provided by operating activities:





Amortization of intangible assets


23,644



25,774


Depreciation and amortization


20,864



18,567


Stock-based compensation expense


8,286



6,561


Impairment of capitalized software


-



8,715


Amortization of deferred costs


1,517



1,808


Provision for bad debt and customer credits


1,594



1,713


Deferred income tax benefit


(8,338)



(13,007)


Gain on interest rate swap


-



(1,455)


Loss on disposal of fixed assets


-



15


Currency remeasurement (gain) loss


(18)



388


Changes in operating assets and liabilities:





Accounts receivable


(2,363)



(690)


Prepaid expenses and other assets


(1,181)



(873)


Accounts payable


5,142



(490)


Accrued expenses and other liabilities


4,132



4,793


Deferred revenue


4,008



747


Net cash provided by operating activities


42,009



35,186


Cash flows from investing activities:





Capitalized software development costs


(20,495)



(18,013)


Capital expenditures


(6,976)



(8,014)


Purchases of investments


(47,604)



(37,445)


Maturities of investments


43,326



41,220


Restricted cash


(2,443)



-


Acquisitions


(600)



(300)


Net cash used in investing activities


(34,792)



(22,552)


Cash flows from financing activities:





Proceeds from exercise of stock options and issuance of common stock, net of withholding taxes


1,645



1,276


Repayments of outstanding principal on long-term debt


(821)



(15,861)


Repayments of outstanding financing arrangements


(708)



(641)


Payment of financing costs


(284)



-


Net cash used in financing activities


(168)



(15,226)


Effect of foreign exchange rate changes on cash and cash equivalents


(307)



(304)


Net increase (decrease) in cash and cash equivalents


6,742



(2,896)


Cash and cash equivalents at beginning of period


43,798



46,694


Cash and cash equivalents at end of period


$

50,540



$

43,798


 

Intralinks Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures
(In Thousands)
(unaudited)




Three Months Ended
December 31,


Years Ended
December 31,



2013


2012


2013


2012

Gross profit


$

45,441



$

41,945



$

169,611



$

154,313


Gross margin


72.6

%


73.1

%


72.3

%


71.2

%

Cost of revenue – amortization of intangible assets


1,985



1,986



8,136



10,369


Cost of revenue – stock-based compensation expense


181



124



692



445


Non-GAAP adjusted gross profit


$

47,607



$

44,055



$

178,439



$

165,127


Non-GAAP adjusted gross margin


76.0

%


76.8

%


76.1

%


76.2

%










Loss from operations


$

(4,817)



$

(1,747)



$

(15,894)



$

(22,300)


Amortization of intangible assets


5,866



5,846



23,644



25,774


Stock-based compensation expense


2,061



1,729



8,286



6,561


Impairment of capitalized software


-



338



-



8,715


Non-GAAP adjusted operating income


$

3,110



$

6,166



$

16,036



$

18,750











Net loss before income tax


$

(5,441)



$

(2,694)



$

(20,627)



$

(27,605)


Amortization of intangible assets


5,866



5,846



23,644



25,774


Stock-based compensation expense


2,061



1,729



8,286



6,561


Impairment of capitalized software


-



338



-



8,715


Costs related to debt repayments


-



-



-



47


Non-GAAP adjusted net income before tax


2,486



5,219



11,303



13,492


Non-GAAP income tax expense


945



1,983



4,295



5,127


Non-GAAP adjusted net income


$

1,541



$

3,236



$

7,008



$

8,365











Net loss


$

(3,849)



$

(1,509)



$

(15,278)



$

(17,380)


Amortization of intangible assets


5,866



5,846



23,644



25,774


Depreciation and amortization


5,722



5,065



20,864



18,567


Stock-based compensation expense


2,061



1,729



8,286



6,561


Impairment of capitalized software


-



338



-



8,715


Interest expense


620



1,190



4,136



6,435


Amortization of debt issuance costs


71



149



358



740


Other (income) expense, net


(67)



(392)



239



(1,870)


Income tax benefit


(1,592)



(1,185)



(5,349)



(10,225)


Non-GAAP adjusted EBITDA


$

8,832



$

11,231



$

36,900



$

37,317


Non-GAAP adjusted EBITDA margin


14.1

%


19.6

%


15.7

%


17.2

%










Net cash provided by operating activities


$

11,876



$

14,004



$

42,009



$

35,186


Capitalized software development costs


(3,920)



(3,337)



(20,495)



(18,013)


Capital expenditures


(1,544)



(1,132)



(6,976)



(8,014)


Free cash flow


$

6,412



$

9,535



$

14,538



$

9,159


 

Intralinks Holdings, Inc.
Reconciliation of GAAP to Non-GAAP Financial Measures - Guidance
(In Thousands)
(unaudited)




Three Months
Ending

March 31,

2014


Year Ending

December 31,

2014

Gross profit


$

39,793



$

173,207


Gross margin


69.8

%


71.6

%

Cost of revenue - amortization of intangible assets


2,019



8,077


Cost of revenue - stock-based compensation expense


188



716


Non-GAAP adjusted gross profit


$

42,000



$

182,000


Non-GAAP adjusted gross margin


73.7

%


75.2

%






Loss from operations


$

(7,867)



$

(18,470)


Amortization of intangible assets


5,867



23,470


Stock-based compensation expense


2,250



9,000


Non-GAAP adjusted operating income


$

250



$

14,000







Net loss before income tax


$

(9,154)



$

(24,393)


Amortization of intangible assets


5,867



23,470


Stock-based compensation expense


2,250



9,000


Non-GAAP adjusted net income before tax


(1,037)



8,077


Non-GAAP income tax expense


(394)



3,069


Non-GAAP adjusted net income


$

(643)



$

5,008







Net loss


$

(6,063)



$

(16,155)


Amortization of intangible assets


5,867



23,470


Depreciation and amortization


6,000



26,000


Stock-based compensation expense


2,250



9,000


Interest expense


1,124



5,302


Amortization of debt issuance costs


163



621


Income tax benefit


(3,091)



(8,238)


Non-GAAP adjusted EBITDA


$

6,250



$

40,000


Non-GAAP adjusted EBITDA margin


11.0

%


16.5

%


Note: All forward-looking figures presented in these tables are stated at the mid-point of the estimated range.

 

©2012 PR Newswire. All Rights Reserved.