BroadSoft
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- BroadSoft Reports Record Third Quarter 2010 Financial Results
BroadSoft Reports Record Third Quarter 2010 Financial Results
Financial Highlights For the Third Quarter of 2010
-- Total revenue increased to$22.3 million ; 22% growth relative to Q3 2009 and 13% growth from Q2 2010. -- License revenue increased to$12.9 million ; 27% growth relative to Q3 2009 and 22% growth from Q2 2010. -- Non-GAAP diluted EPS increased to$0.08 per common share; GAAP diluted EPS increased to$0.05 per common share
Results for the three months ended
Total revenue rose to a record
Net income for the third quarter of 2010 was
On a non-GAAP basis, net income in the third quarter of 2010 was
Management Commentary
"Our third quarter results were bolstered by the continued growing demand
for our consumer and hosted unified communications applications," said
"In the third quarter of 2010, license revenue improved 27% year-over-year
and 22% sequentially. Moreover, our operating leverage enabled us to
improve operating margins and achieve profitability ahead of plan," said
Results for the nine months ended
Total revenue was
Net loss for the first nine months of 2010 was
On a non-GAAP basis, net loss in the first nine months of 2010 was
Guidance
For the fourth quarter of 2010,
Conference Call
For those unable to participate in the live call, an audio replay will be
available between
Use of Non-GAAP Financial Measures
Non-GAAP net income (loss) and net income (loss) per share. We define
non-GAAP net income (loss) as net income (loss) plus stock-based
compensation expense and amortization expense related to acquired
intangible assets. We define non-GAAP income (loss) per share as non-GAAP
net income (loss) divided by the weighted average shares outstanding.
Also, in calculating non-GAAP net income (loss) per share for the three
months ended
Non-GAAP gross margin, license gross margin and maintenance and
professional services gross margin. We define non-GAAP gross margin as
gross margin plus stock-based compensation expense and amortization expense
related to acquired intangible assets. We consider non-GAAP gross margin
to be a useful metric for management and our investors because it excludes
the effect of certain non-cash expenses so that management and its
investors can compare
Non-GAAP income (loss) from operations. We define non-GAAP income (loss)
from operations as income (loss) from operations plus stock-based
compensation expense and amortization expense related to acquired
intangible assets. We consider non-GAAP income (loss) from operations to
be a useful metric for management and our investors because it excludes the
effect of certain non-cash expenses so that management and our investors
can compare
The presentation of non-GAAP net income (loss), non-GAAP net income (loss) per share, non-GAAP gross margin, non-GAAP income (loss) from operations and other non-GAAP financial measures in this release and on this afternoon's teleconference is not meant to be a substitute for "net income (loss)," "net income (loss) per share," "gross margin," "income (loss) from operations" or other financial measures presented in accordance with GAAP, but rather should be evaluated in conjunction with such data. Our definition of "non-GAAP net income (loss)," "non-GAAP net income (loss) per share," "non-GAAP gross margin," "non-GAAP income (loss) from operations" and other non-GAAP financial measures may differ from similarly titled non-GAAP measures used by other companies and may differ from period to period. In reporting non-GAAP measures in the future, management may make other adjustments for expenses and gains that it does not consider reflective of core operating performance in a particular period and may modify "non-GAAP net income (loss)," "non-GAAP net income (loss) per share," "non-GAAP gross margin," "non-GAAP income (loss) from operations" and such other non-GAAP measures by excluding these expenses and gains.
Forward-Looking Statements
This press release may contain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements may be identified by their use of terms and
phrases such as "anticipate," "enable," "expect," "will," "believe" and
other similar terms and phrases, and such forward-looking statements
include, but are not limited to, the statements regarding the Company's
future financial performance set forth under the heading "Guidance". The
outcome of the events described in these forward-looking statements is
subject to known and unknown risks, uncertainties and other factors that
could cause actual results to differ materially from the results
anticipated by these forward-looking statements, including, but not limited
to: the Company's dependence on the success of BroadWorks and on its
service provider customers to sell services using its applications; claims
that the Company infringes the intellectual property rights of others; the
Company's dependence in large part on service providers' continued
deployment of, and investment in, their IP-based networks; and the
Company's ability to expand its product offerings, as well as those factors
contained in the "Risk Factors" section of the Company's Form 10-Q for the
quarter ended
About
Financial Statements
The financial statements set forth below are not the complete set of the
Company's financial statements for the quarter and are presented below
without footnotes. Readers are encouraged to obtain and carefully review
BroadSoft, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
September 30, December 31,
2010 2009
----------- -----------
(In thousands)
Assets
Current assets:
Cash and cash equivalents $ 49,488 $ 22,869
Accounts receivable, net of allowance for
doubtful accounts of $20 and $169
at September 30, 2010 and December 31, 2009 ,
respectively 30,611 25,471
Other current assets 5,152 4,829
----------- -----------
Total current assets 85,251 53,169
----------- -----------
Long-term assets:
Property and equipment, net 3,104 1,563
Restricted cash 1,057 599
Intangible assets, net 2,592 3,163
Goodwill 5,537 4,728
Other long-term assets 2,039 3,441
----------- -----------
Total long-term assets 14,329 13,494
----------- -----------
Total assets $ 99,580 $ 66,663
=========== ===========
Liabilities, redeemable preferred stock,
redeemable convertible preferred stock and
stockholders' equity (deficit):
Current liabilities:
Notes payable and bank loans, current portion $ 1,179 $ 4,536
Accounts payable and accrued expenses 11,009 11,903
Deferred revenue, current portion 52,255 33,806
----------- -----------
Total current liabilities 64,443 50,245
Notes payable and bank loans 1,194 14,035
Deferred revenue 2,043 6,241
Other long-term liabilities 1,619 756
----------- -----------
Total liabilities 69,299 71,277
----------- -----------
Redeemable preferred stock and redeemable
convertible preferred stock: - 73,186
Stockholders' equity (deficit):
BroadSoft, Inc. stockholders' equity (deficit):
Common stock 247 63
Additional paid-in capital 131,419 20,340
Accumulated other comprehensive loss (1,712) (1,725)
Accumulated deficit (99,673) (96,474)
----------- -----------
Total BroadSoft, Inc. stockholders' equity
(deficit) 30,281 (77,796)
Noncontrolling interest - (4)
----------- -----------
Total stockholders' equity (deficit) 30,281 (77,800)
----------- -----------
Total liabilities and stockholders' equity
(deficit) $ 99,580 $ 66,663
=========== ===========
BroadSoft, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2010 2009 2010 2009
---------- --------- --------- ---------
(In thousands, except per share data)
Revenue:
Licenses $ 12,877 $ 10,170 $ 32,215 $ 27,237
Maintenance and professional
services 9,396 8,024 27,633 22,349
---------- --------- --------- ---------
Total revenue 22,273 18,194 59,848 49,586
Cost of revenue:
Licenses 1,374 1,025 3,616 3,279
Maintenance and professional
services 3,329 3,016 10,556 9,558
Amortization of intangibles 186 210 571 629
---------- --------- --------- ---------
Total cost of revenue 4,889 4,251 14,743 13,466
---------- --------- --------- ---------
Gross profit 17,384 13,943 45,105 36,120
Operating expenses:
Sales and marketing 7,789 7,034 22,601 21,628
Research and development 4,787 3,864 14,230 12,147
General and administrative 3,349 2,683 10,236 8,561
---------- --------- --------- ---------
Total operating expenses 15,925 13,581 47,067 42,336
---------- --------- --------- ---------
Income (loss) from operations 1,459 362 (1,962) (6,216)
Other expense, net: 13 339 874 1,010
Income (loss) before income
taxes 1,446 23 (2,836) (7,226)
Provision for income taxes 237 373 363 1,000
---------- --------- --------- ---------
Net income (loss) 1,209 (350) (3,199) (8,226)
---------- --------- --------- ---------
Net loss attributable to
noncontrolling interest - (1) - (3)
---------- --------- --------- ---------
Net income (loss) attributable
to BroadSoft, Inc. $ 1,209 $ (349) $ (3,199) $ (8,223)
========== ========= ========= =========
Net income (loss) per common
share available to BroadSoft,
Inc. common stockholders:
Basic $ 0.05 $ (0.06) $ (0.24) $ (1.31)
Diluted $ 0.05 $ (0.06) $ (0.24) $ (1.31)
Weighted average common shares
outstanding:
Basic 24,688 6,285 13,369 6,279
Diluted 26,646 6,285 13,369 6,279
Stock-based compensation
expense included above:
Cost of revenue $ 63 $ 86 $ 155 $ 283
Sales and marketing 239 265 604 926
Research and development 196 150 463 665
General and administrative 324 247 984 1,324
Summary of Consolidated Cash Flow Activity
(unaudited)
Nine Months Ended
September 30,
2010 2009
----------- -----------
(In thousands)
Net cash provided by operating activities $ 10,392 $ 9,487
Net cash used in investing activities (3,123) (905)
Net cash provided by (used in) financing
activities 19,314 (2,102)
BroadSoft, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Three
Three Months Ended Months Ended Nine Months Ended
September 30, June 30, September 30,
2010 2009 2010 2010 2009
--------- --------- --------- --------- ---------
(In thousands, except per share data)
Non-GAAP gross
profit:
GAAP gross profit $ 17,384 $ 13,943 $ 14,711 $ 45,105 $ 36,120
(percent of total
revenue) 78% 77% 74% 75% 73%
Plus:
Stock-based
compensation
expense 63 86 57 155 283
Amortization of
acquired
intangible assets 186 210 192 571 629
--------- --------- --------- --------- ---------
Non-GAAP gross
profit $ 17,633 $ 14,239 $ 14,960 $ 45,831 $ 37,032
========= ========= ========= ========= =========
(percent of total
revenue) 79% 78% 76% 77% 75%
GAAP licenses gross
profit $ 11,317 $ 8,935 $ 9,337 $ 28,028 $ 23,329
(percent of
related revenue) 88% 88% 88% 87% 86%
Plus:
Stock-based
compensation
expense 21 45 26 69 150
Amortization of
acquired
intangible assets 186 210 192 571 629
Non-GAAP license
gross profit $ 11,524 $ 9,190 $ 9,555 $ 28,668 $ 24,108
========= ========= ========= ========= =========
(percent of
related revenue) 89% 90% 91% 89% 89%
GAAP maintenance and
professional
services gross
profit $ 6,067 $ 5,008 $ 5,374 $ 17,077 $ 12,791
(percent of
related revenue) 65% 62% 58% 62% 57%
Plus:
Stock-based
compensation
expense 42 41 31 86 133
Non-GAAP maintenance
and professional
services gross
profit $ 6,109 $ 5,049 $ 5,405 $ 17,163 $ 12,924
========= ========= ========= ========= =========
(percent of
related revenue) 65% 63% 59% 62% 58%
Non-GAAP income
(loss) from
operations:
GAAP income (loss)
from operations $ 1,459 $ 362 $ (1,559) $ (1,962) $ (6,216)
(percent of total
revenue) 7% 2% -8% -3% -13%
Plus:
Stock-based
compensation
expense 822 748 1,063 2,206 3,198
Amortization of
acquired
intangible assets 186 210 192 571 629
--------- --------- --------- --------- ---------
Non-GAAP income
(loss) from
operations $ 2,467 $ 1,320 $ (304) $ 815 $ (2,389)
========= ========= ========= ========= =========
(percent of total
revenue) 11% 7% -2% 1% -5%
GAAP operating
expense $ 15,925 $ 13,581 $ 16,270 $ 47,067 $ 42,336
Less:
Stock-based
compensation
expense 822 748 1,063 2,206 3,198
--------- --------- --------- --------- ---------
Non-GAAP operating
expense $ 15,103 $ 12,833 $ 15,207 $ 44,861 $ 39,138
========= ========= ========= ========= =========
(as percent of
total revenue) 68% 71% 77% 75% 79%
GAAP sales and
marketing expense $ 7,789 $ 7,034 $ 7,710 $ 22,601 $ 21,628
Less:
Stock-based
compensation
expense 239 265 254 604 926
--------- --------- --------- --------- ---------
Non-GAAP sales and
marketing expense $ 7,550 $ 6,769 $ 7,456 $ 21,997 $ 20,702
========= ========= ========= ========= =========
(as percent of
total revenue) 34% 37% 38% 37% 42%
GAAP research and
development expense $ 4,787 $ 3,864 $ 4,952 $ 14,230 $ 12,147
Less:
Stock-based
compensation
expense 196 150 201 463 665
--------- --------- --------- --------- ---------
Non-GAAP research
and development
expense $ 4,591 $ 3,714 $ 4,751 $ 13,767 $ 11,482
========= ========= ========= ========= =========
(as percent of
total revenue) 21% 20% 24% 23% 23%
GAAP general and
administrative
expense $ 3,349 $ 2,683 $ 3,608 $ 10,236 $ 8,561
Less:
Stock-based
compensation
expense 324 247 551 984 1,324
--------- --------- --------- --------- ---------
Non-GAAP general and
administrative
expense $ 3,025 $ 2,436 $ 3,057 $ 9,252 $ 7,237
========= ========= ========= ========= =========
(as percent of
total revenue) 14% 13% 15% 15% 15%
Non-GAAP net income
(loss) and income
(loss) per share:
GAAP net income
(loss) $ 1,209 $ (349) $ (1,774) $ (3,199) $ (8,223)
Plus:
Stock-based
compensation
expense 822 748 1,063 2,206 3,198
Amortization of
acquired
intangible assets 186 210 192 571 629
--------- --------- --------- --------- ---------
Non-GAAP net income
(loss) $ 2,217 $ 609 $ (519) $ (422) $ (4,396)
========= ========= ========= ========= =========
GAAP net income
(loss) per basic
common share $ 0.05 $ (0.06) $ (0.20) $ (0.24) $ (1.31)
Plus:
Adjustment for
preferred stock
conversion - 0.04 0.11 0.09 0.88
Stock-based
compensation
expense 0.03 0.04 0.05 0.10 0.17
Amortization of
acquired
intangible assets 0.01 0.01 0.01 0.03 0.03
--------- --------- --------- --------- ---------
Non-GAAP net income
(loss) per basic
common share $ 0.09 $ 0.03 $ (0.03) $ (0.02) $ (0.23)
========= ========= ========= ========= =========
GAAP net income per
diluted common
share (1) $ 0.05 $ (0.06)
Plus:
Adjustment for
preferred stock
conversion - 0.04
Stock-based
compensation
expense 0.03 0.04
Amortization of
acquired
intangible assets - 0.01
--------- ---------
Non-GAAP net income
per diluted common
share $ 0.08 $ 0.03
========= =========
Non-GAAP weighted
average shares
outstanding: (2)
GAAP weighted
average shares
outstanding 24,688 6,285 8,824 13,369 6,279
Add:
Adjustment for
convertible
preferred stock
conversion - 12,712 11,538 8,119 12,712
Non-GAAP weighted
average shares
outstanding 24,688 18,997 20,362 21,488 18,991
(1) The three months ended June 30, 2010 , and the nine months ended
September 30, 2010 and 2009 are not presented because the effect of
the share equivalents is anti-dilutive given the Company's losses for
these periods.
(2) For the calculation of GAAP weighted average shares outstanding, the
shares of common stock underlying shares of redeemable convertible
preferred stock are not included for the periods prior to the IPO,
whereas for the non-GAAP weighted average shares outstanding, we
assume the conversion of all shares of redeemable convertible
preferred stock at the beginning of each respective period.
BroadSoft, Inc.
Reconciliation of Expected Non-GAAP Financial Measures
(Unaudited)
Three months ended Year Ending
December 31, 2010 December 31, 2010
--------------------- ---------------------
Low End High End Low End High End
---------- ---------- ---------- ---------
(In thousands, except per share data)
Non-GAAP net income:
GAAP net income $ 6,200 $ 7,000 $ 3,000 $ 3,800
Plus:
Stock-based compensation
expense 1,000 1,000 3,200 3,200
Amortization of acquired
intangible assets 200 200 800 800
---------- ---------- ---------- ---------
Non-GAAP net income $ 7,400 $ 8,200 $ 7,000 $ 7,800
========== ========== ========== =========
Non-GAAP income per share:
GAAP net income per basic
common share $ 0.25 $ 0.28 $ 0.18 $ 0.23
Plus:
Adjustment for preferred stock
conversion - - (0.05) (0.06)
Stock-based compensation
expense 0.04 0.04 0.14 0.14
Amortization of acquired
intangible assets 0.01 0.01 0.04 0.04
---------- ---------- ---------- ---------
Non-GAAP net income per basic
common share $ 0.30 $ 0.33 $ 0.31 $ 0.35
========== ========== ========== =========
GAAP net income per diluted
common share $ 0.23 $ 0.26 $ 0.11 $ 0.14
Plus:
Adjustment for preferred stock
conversion - - 0.01 0.01
Stock-based compensation
expense 0.04 0.04 0.13 0.13
Amortization of acquired
intangible assets 0.01 0.01 0.03 0.03
---------- ---------- ---------- ---------
Non-GAAP net income per diluted
common share $ 0.28 $ 0.31 $ 0.28 $ 0.31
---------- ---------- ---------- ---------
Contact Information For further information contact: Investor Relations:Monica Gould +1-212-551-1459 monica@blueshirtgroup.com Industry Analyst / Media Relations:Alex Moorhouse Mi Liberty +44 (0) 207 751 4444 amoorhouse@miliberty.com
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