Avid reported that its revenue for the fourth quarter of 2011 was $185.3m, down 5% versus the same period a year ago, and up 12% compared to the previous quarter.
Significantly, the company generated $14.4m in cash from operations during the quarter, and posted GAAP net income of $1.2m, Avid’s first positive GAAP net income since 2007. On a non-GAAP basis Avid posted a profit of $14.6m, or 38 cents a share, versus non-GAAP net income of $14.2m last year.
The results exceeded the consensus estimates of analysts who were looking for revenues of $176.34m, and non-GAAP earnings of 16 cents per share. The strong performance pleased investors who drove the company’s stock up more than 20% on the news.
The results were helped by a variety of factors including the impact of a previously announced restricting program, increased spending for the 2012 Olympics, and ongoing success with converting Apple Final Cut Pro (FCP) users to Avid’s Media Composer platform. The company said that it had converted approximately 6,000 FCP users to Avid since Apple launched the FCP-X system in June of 2011.
On a geographic basis, the company said it experienced year-over-year growth in Europe during the quarter, but that sales in the Americas and Asia-Pac region declined versus last year.
Gross margins in the quarter were 54.1%, the highest since 2005, thanks to a favorable product mix, operational efficiencies and increased support revenues on modest spending growth.
Operating expenses for the quarter were $101.3m, down 7% versus last year.
Non-GAAP operating expenses were $88m, a $3.9m decrease year on year primarily related to the reduction in workforce announced in October of 2011 and lower variable compensation due to lower bonus payments. This is the lowest non-GAAP operating expense figure that Avid has posted since the fourth quarter of 2004.
Avid says it will continue to ensure than spending is lower than revenue growth, and pointed out that it has reduced headcount by 600 people over the last four years, while increasing less expensive off-shore contractors.
Highlights for the fourth quarter:
- Video revenue in the quarter was $116.2m, down 1% versus the same period a year ago, and up 18% versus the previous quarter. Video revenue accounted for 63% of the total revenue during the quarter, versus 60% last quarter. The company said that professional editing had strong unit sales and that there was a year-on-year increase in Media Composer software revenue. Shared storage and workflow systems were also strong in the quarter. However video revenue was down slightly overall because of lower hardware sales.
- Audio revenue in the quarter was $69.1m, down 11% versus the same period a year ago, and up 4% versus the previous quarter. Revenue from Pro Tools declined on a year-over-year basis due to a very strong Q4 performance last year, when the first open version of the product was released. Control surfaces and Pro Tools HD also experienced growth, but audio revenue declined in the “creative enthusiast” market, due mainly to weak demand in consumer markets as well as discontinued products.
- Revenue from products was $148m, a decrease of 9% versus the same period a year ago, and up 12% versus the previous quarter. Product revenue accounted for 80% of the total revenue during the quarter, the same as last quarter.
- Service revenue in the quarter (including maintenance support, professional services revenue, and training) was $37.3m, an increase of 15% versus last year. The company said this was a record result for service revenue.
Full year results:
Revenue for the full year 2011 was $677.9m, flat with 2010, and above previously issued guidance of $665m-$675m.
The GAAP net loss for the year was $23.8m, an improvement on the GAAP net loss of $37m in 2010. On a non-GAAP basis, the company’s net income for 2011 was $10.2m, versus non-GAAP income of $9.2m in 2010.
Gross margins for the year were 53% versus 52% in 2010, the highest they have been since 2005. Operating expenses for the full year were $386.9m, 2% lower than in 2010.
Guidance for 2012
Avid CFO Ken Sexton said he expects the company’s 2012 revenue to grow in the “low single digits” driven by growth from media enterprise customers. The company says it is could achieve a non-GAAP operating profit of 5% for the year even if revenue is flat, and that it “could report a GAAP net income for 2012.”
Avid CEO Gary Greenfield issued an upbeat statement saying ““Our results for the fourth quarter were encouraging and reflect our continued efforts to streamline our operations and improve execution across the business. For the quarter, we reported positive GAAP net income for the first time since 2007, positive cash flow from operations and the highest gross margin as a percent of revenue since 2005. In addition, we have implemented the restructuring we announced in October and expect to see additional benefit from these actions in 2012. We continue to identify and implement changes across the Company to help improve our operational performance and remain sharply focused on improving profitability while driving revenue growth.”
Press Release: Avid Announces Results for Fourth Quarter 2011
Replay of Avid Earning Conference Call with Equity Analysts
Previous Quarter: Avid Posts $8 Million Net Loss for Q3 2011, Announces 10 Percent Workforce Reduction
Previous Year: Avid Announces Full Year Results, Nears Q4 Break Even as Revenue Increases 12 Percent
Avid To Cut Workforce by 10%, Close Facility, Take Q4 Charge of $10m-11m
Avid One of Five Companies Google Should Buy in 2012 – Forbes
Avid Brings Its “Pro-sumer” Video Editing App to iPad
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