BURLINGTON, Mass., Nov. 07, 2019 (GLOBE NEWSWIRE) -- Avid® (NASDAQ: AVID), a leading technology provider that powers the media and entertainment industry, today announced its third quarter 2019 financial results and reaffirmed the full-year 2019 guidance provided on October 31, 2019.

Third Quarter 2019 Financial and Business Highlights

• Results were in line with preliminary results provided on October 31, 2019.
• Revenue was $93.5 million, down (10.2%) year-over-year from $104.0 million in Q3 2018. 
• Gross margin was 61.9%, up 360 basis points year-over-year.  Non-GAAP Gross Margin was 62.1%, up 190 basis points year-over-year.
• Operating expenses were $49.5 million, a decrease of (7.7%) year-over-year.  Non-GAAP Operating Expenses were $47.3 million, a decrease of (6.8%) year over year.
• Operating income was $8.4 million, up 19.5% year-over-year.  Non-GAAP Operating Income was $10.7 million, a decrease of (9.6%) year-over-year.
• Adjusted EBITDA was $12.8 million, a decrease of (12.3%) year-over-year.  Adjusted EBITDA Margin was 13.7%, down (30) basis points year-over-year. 
• Net income per common share was $0.07, up from net income per common share of $0.02 in Q3 2018.  Non-GAAP Net Income per Share was $0.10, down from Non-GAAP Net Income per Share of $0.13 in Q3 2018.
• Net cash (used in) operating activities was ($2.6) million in Q3 2019, an improvement of $1.1 million compared to Net cash (used in) operating activities of ($3.7) million in Q3 2018.
• Free Cash Flow was ($4.6) million, an improvement of $1.8 million compared to Free Cash Flow of ($6.4) million in Q3 2018.
• Software revenue from subscriptions was $10.3 million, an increase of 17% year-over-year, with approximately 170,000 cloud-enabled software subscriptions as of September 30, 2019, up 46% year-over-year.
• Software subscriptions billings were up 49% year-over-year.
• Maintenance revenue was $33.4 million, a decrease of ($1.7) million year-over-year, but up $1.7 million sequentially from Q2 2019.
• Recurring Revenue was 59.4% of the Company’s revenue in the twelve months ended September 30, 2019, up 560 basis points from 53.8% in the twelve months ended September 30, 2018.
• Annual Contract Value was $258 million at the end of Q3 2019, up 3.7% from $249 million at the end of Q3 2018.

“As we indicated in our preliminary earnings release last week, while we are disappointed with our performance during the third quarter, we remain enthusiastic about the long-term trajectory of the Company and the opportunity for improving growth and profitability,” said Jeff Rosica, Chief Executive Officer and President of Avid.  Mr. Rosica continued, “Our strong growth in subscription software and sequentially higher maintenance revenue for the third quarter also indicates our strategy for growing higher margin recurring revenue is progressing as planned.”

Ken Gayron, Executive Vice President and Chief Financial Officer of Avid added, “The revised guidance for full-year 2019 provided last week reflects the impact of the supply chain transition and softer demand from our smaller enterprise customers in hardware sales that the Company experienced during the third quarter.”  Mr. Gayron continued, “The Company expects better performance in our seasonally stronger fourth quarter of 2019 and believes Avid will report strong year-over-year growth in Adjusted EBITDA for the full-year 2019 and achieve its original Free Cash Flow guidance for the full-year 2019.”

Explanations regarding our use of non-GAAP financial measures and operational metrics and related definitions, and reconciliations of our GAAP and non-GAAP measures, are provided in the sections below entitled "Non-GAAP Financial Measures and Operational Metrics" and "Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures".

Full Year 2019 Guidance

Avid is also reaffirming its guidance for Revenue, Adjusted EBITDA, Free Cash Flow and Non-GAAP Net Income Per Share for full-year 2019 that was issued on October 31, 2019.

($ millions, except per share amounts)	Full-Year 2019
Revenue	$405 - $415
Adjusted EBITDA	$55 - $60
Free Cash Flow	$12 - $17
Non-GAAP Net Income Per Share	$0.50 - $0.60

All guidance presented by the Company is inherently uncertain and subject to numerous risks and uncertainties. Avid’s actual future results of operations could differ materially from those shown in the table above. For a discussion of some of the key assumptions underlying the guidance, as well as the key risks and uncertainties associated with these forward-looking statements, please see “Forward-Looking Statements” below as well as the Avid Technology Q3 2019 Business Update presentation posted on Avid’s Investor Relations website http://ir.avid.com.

Conference Call

Avid will host a conference call to discuss its financial results for the third quarter on Thursday, November 7, 2019 at 5:00 p.m. ET.  The call will be open to the public and can be accessed by dialing +1 334-777-6978 and referencing confirmation code 7163009. You may also access the presentation slides and listen to the call on the Avid Investor Relations website.  To listen via the website, go to the events tab at ir.avid.com for complete details prior to the start of the conference call.  A replay of the call will also be available for a limited time on the Avid Investor Relations website shortly after the completion of the call.

2019 Investor Day

Avid will host an Investor Day on Tuesday, November 19, 2019 from 10:00 am to 3:00 pm Eastern Time at the NASDAQ MarketSite located at 4 Times Square, New York, NY.  Avid will provide a detailed review of its business and strategy. Interested attendees should RSVP to Whit Rappole, VP of Investor Relations, at IR@Avid.com by November 12, 2019 to confirm attendance. A webcast and replay of the Investor Day will also be available on the Avid Investor Relations website.

Non-GAAP Financial Measures and Operational Metrics

Avid includes non-GAAP financial measures in this press release, including Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Non-GAAP Gross Profit, Non-GAAP Gross Margin, Non-GAAP Operating Expenses, Non-GAAP Operating Income, Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) per Share. The Company also includes the operational metrics of Billings, Cloud-enabled software subscriptions, Recurring Revenue and Annual Contract Value in this release. Avid believes the non-GAAP financial measures and operational metrics provided in this release provide helpful information to investors with respect to evaluating the Company’s performance. Unless noted, all financial and operating information is reported based on actual exchange rates. Definitions of the non-GAAP financial measures and operational metrics are included in our Form 8-K filed today.  Reconciliations of the non-GAAP financial measures presented in this press release to the Company's comparable GAAP financial measures for the periods presented are set forth below and are also included in the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com, which also includes definitions of all operational metrics.

This earnings press release also includes forward-looking non-GAAP financial measures, including Adjusted EBITDA, Free Cash Flow, and Non-GAAP Net Income Per Share. Reconciliations of these forward-looking non-GAAP financial measures are not included in the earnings release due to the high variability and difficulty in making accurate forecasts and projections of some of the excluded information, together with some of the excluded information not being ascertainable or accessible at this time. As a result, the Company is unable to quantify certain amounts that would be required to be included in the most directly comparable GAAP financial measure without unreasonable efforts.

Forward-Looking Statements

Certain information provided in this press release, including the tables attached hereto, include forward-looking statements that involve risks and uncertainties, including projections and statements about our anticipated plans, objectives, expectations and intentions. Among other things, this press release includes estimated results of operations for the year ending December 31, 2019, which estimates are based on a variety of assumptions about key factors and metrics that will determine our future results of operations, including, for example, completion of the transition of our hardware supply chain, anticipated market uptake of new products and market-based cost inflation. Other forward-looking statements include, without limitation, statements based upon or otherwise incorporating judgments or estimates relating to future performance such as future operating results and expenses; earnings; backlog; product mix and free cash flow; Recurring Revenue and Annual Contract Value; our future strategy and business plans; our product plans, including products under development, such as cloud and subscription based offerings; our ability to raise capital and our liquidity. The projected future results of operations, and the other forward-looking statements in this release, are based on current expectations as of the date of this release and subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including but not limited to the effect on our sales, operations and financial performance resulting from: our liquidity; our ability to execute our strategic plan, including our cost saving strategies and transition of our hardware supply chain, and meet customer needs; our ability to retain and hire key personnel; our ability to produce innovative products in response to changing market demand, particularly in the media industry; our ability to successfully accomplish our product development plans; competitive factors; history of losses; fluctuations in our revenue based on, among other things, our performance and risks in particular geographies or markets; our higher indebtedness and ability to service it and meet the obligations thereunder; restrictions in our credit facilities; our move to a subscription model and related effect on our revenues and ability to predict future revenues; fluctuations in subscription and maintenance renewal rates; elongated sales cycles; fluctuations in foreign currency exchange rates; seasonal factors; adverse changes in economic conditions; variances in our revenue backlog and the realization thereof; and the possibility of legal proceedings adverse to our company. Moreover, the business may be adversely affected by future legislative, regulatory or other changes, including tax law changes, as well as other economic, business and/or competitive factors. The risks included above are not exhaustive. Other factors that could adversely affect our business and prospects are set forth in our public filings with the SEC. Forward-looking statements contained herein are made only as to the date of this press release and we undertake no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

About Avid

Avid delivers the most open and efficient media platform, connecting content creation with collaboration, asset protection, distribution, and consumption. Avid’s preeminent customer community uses Avid’s comprehensive tools and workflow solutions to create, distribute and monetize the most watched, loved and listened to media in the world—from prestigious and award-winning feature films to popular television shows, news programs and televised sporting events, and celebrated music recordings and live concerts. With the most flexible deployment and pricing options, Avid’s industry-leading solutions include Media Composer®, Pro Tools®, Avid NEXIS®, MediaCentral®, iNEWS®, AirSpeed®, Sibelius®, Avid VENUE™, Avid FastServe®™, Maestro™, and PlayMaker™. For more information about Avid solutions and services, visit www.avid.com, connect with Avid on Facebook, Instagram, Twitter, YouTube, LinkedIn, or subscribe to Avid Blogs.

© 2019 Avid Technology, Inc. All rights reserved. Avid, the Avid logo, Avid NEXIS, Avid FastServe, AirSpeed, iNews, Maestro, MediaCentral, Media Composer, NewsCutter, PlayMaker, Pro Tools, Avid VENUE, and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. All other trademarks are the property of their respective owners. Product features, specifications, system requirements and availability are subject to change without notice.

Contacts
Investor contact: Whit Rappole Avid ir@avid.com (978) 275-2032		PR contact: Jim Sheehan Avid jim.sheehan@avid.com (978) 640-3152

AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except per share data)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
			2019				2018				2019				2018
Net revenues:
Products		$	42,911			$	52,133			$	147,633			$	144,922
Services			50,550				51,913				147,848				155,676
Total net revenues			93,461				104,046				295,481				300,598
Cost of revenues:
Products			23,877				27,042				79,535				79,684
Services			11,726				14,443				36,408				42,414
Amortization of intangible assets			-				1,950				3,738				5,850
Total cost of revenues			35,603				43,435				119,681				127,948
Gross profit			57,858				60,611				175,800				172,650
Operating expenses:
Research and development			14,860				15,873				46,325				47,543
Marketing and selling			22,334				23,461				73,341				77,352
General and administrative			12,034				13,660				38,543				41,656
Amortization of intangible assets			-				363				695				1,089
Restructuring costs, net			229				226				518				3,401
Total operating expenses			49,457				53,583				159,422				171,041
Operating income (loss)			8,401				7,028				16,378				1,609
Interest and other expense, net			(5,519	)			(5,725	)			(23,994	)			(17,362	)
Income (loss) before income taxes			2,882				1,303				(7,616	)			(15,753	)
Provision for income taxes			(283	)			425				155				824
Net income (loss)		$	3,165			$	878			$	(7,771	)		$	(16,577	)
Net income (loss) per common share - basic and diluted		$	0.07			$	0.02			$	(0.18	)		$	(0.40	)
Weighted-average common shares outstanding - basic			42,913				41,792				42,510				41,596
Weighted-average common shares outstanding - diluted			43,674				42,226				42,510				41,596

AVID TECHNOLOGY, INC.
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures
(unaudited - in thousands)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
GAAP revenue			2019				2018				2019				2018
GAAP revenue		$	93,461			$	104,046			$	295,481			$	300,598
Amortization of acquired deferred revenue			-				-				-				-
Total net revenues		$	93,461			$	104,046				295,481				300,598
Non-GAAP Gross Profit
GAAP gross profit			57,858				60,611				175,800				172,650
Amortization of acquired deferred revenue			-				-				-				-
Amortization of intangible assets			-				1,950				3,738				5,850
Stock-based compensation			185				95				420				222
Non-GAAP Gross Profit		$	58,043			$	62,656				179,958				178,722
Non-GAAP Gross Margin			62.1	%			60.2	%			60.9	%			59.5	%
Non-GAAP Operating Expenses
GAAP operating expenses			49,457				53,583				159,422				171,041
Less Amortization of intangible assets			-				(363	)			(695	)			(1,089	)
Less Stock-based compensation			(1,860	)			(1,981	)			(5,368	)			(4,109	)
Less Restructuring costs, net			(229	)			(226	)			(518	)			(3,401	)
Less Restatement costs			-				(223	)			2				(815	)
Less Acquisition, integration and other costs			(32	)			(17	)			(458	)			(61	)
Less Efficiency program costs			(33	)			(2	)			(191	)			(80	)
Non-GAAP Operating Expenses		$	47,303			$	50,771				152,194				161,486
Non-GAAP Operating Income
GAAP operating income (loss)			8,401				7,028				16,378				1,609
Amortization of acquired deferred revenue			-				-				-				-
Amortization of intangible assets			-				2,313				4,433				6,939
Stock-based compensation			2,045				2,076				5,788				4,331
Restructuring costs, net			229				226				518				3,401
Restatement costs			-				223				(2	)			815
Acquisition, integration and other costs			32				17				458				61
Efficiency program costs			33				2				191				80
Non-GAAP Operating Income		$	10,740			$	11,885				27,764				17,236
Adjusted EBITDA
Non-GAAP Operating Income (from above)			10,740				11,885				27,764				17,236
Depreciation			2,045				2,693				7,037				8,967
Adjusted EBITDA		$	12,785			$	14,578				34,801				26,203
Adjusted EBITDA Margin			13.7	%			14.0	%			11.8	%			8.7	%
Non-GAAP Net Income (Loss)
Non-GAAP Operating Income (from above)			10,740				11,885				27,764				17,236
Less: Non-GAAP Interest and other expense			(5,519	)			(5,725	)			(16,623	)			(17,362	)
Less: Income tax impact of Non-GAAP adjustments			(663	)			(597	)			(1,119	)			(1,076	)
Non-GAAP Net Income (Loss)		$	4,558			$	5,563			$	10,022			$	(1,202	)
Weighted-average common shares outstanding - diluted			43,674				42,226				42,510				41,596
Non-GAAP Earnings (Loss) Per Share		$	0.10			$	0.13			$	0.24			$	(0.03	)
Free Cash Flow
GAAP net cash (used in) provided by operating activities			(2,551	)			(3,747	)			1,112				(4,248	)
Capital expenditures			(2,052	)			(2,652	)			(5,629	)			(7,540	)
Free Cash Flow		$	(4,603	)		$	(6,399	)			(4,517	)			(11,788	)
Free Cash Flow conversion of Adjusted EBITDA			-36.0	%			-43.9	%			-13.0	%			-45.0	%
These non-GAAP measures reflect how Avid manages its businesses internally. Avid’s non-GAAP measures may vary from how other companies present non-GAAP measures. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with, disclosures required by generally accepted accounting principles, or GAAP. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP.

AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)
		September 30,				December 31,
			2019			2018
ASSETS
Current assets:
Cash and cash equivalents		$	52,289			56,103
Restricted cash			1,664			8,500
Accounts receivable, net of allowances of $598 and $1,339
at September 30, 2019 and December 31, 2018, respectively			53,718			67,754
Inventories			32,168			32,956
Prepaid expenses			13,140			8,853
Contract assets			14,418			16,513
Other current assets			6,559			5,917
Total current assets			173,956			196,596
Property and equipment, net			20,140			21,582
Intangible assets, net			-			4,432
Goodwill			32,643			32,643
Right of use assets			31,467
Long-term deferred tax assets, net			2,006			1,158
Other long-term assets			6,009			9,432
Total assets		$	266,221			265,843
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable		$	35,554			39,239
Accrued compensation and benefits			16,601			21,967
Accrued expenses and other current liabilities			36,531			37,547
Income taxes payable			2,170			1,853
Short-term debt			29,705			1,405
Deferred revenues			71,224			85,662
Total current liabilities			191,785			187,673
Long-term debt			199,593			220,590
Long-term deferred revenues			13,757			13,939
Long-term lease liabilities			28,930			-
Other long-term liabilities			5,081			10,302
Total liabilities			439,146			432,504
Stockholders' deficit:
Common stock			429			423
Additional paid-in capital			1,025,796			1,028,924
Accumulated deficit			(1,194,781	)		(1,187,010	)
Treasury stock at cost			-			(5,231	)
Accumulated other comprehensive loss			(4,369	)		(3,767	)
Total stockholders' deficit			(172,925	)		(166,661	)
Total liabilities and stockholders' deficit		$	266,221			265,843

AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)
		Nine Months Ended
		September 30,
			2019				2018
Cash flows from operating activities:
Net loss		$	(7,771	)		$	(16,577	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization			11,469				15,905
(Recovery from) provision for doubtful accounts			(156	)			61
Stock-based compensation expense			5,788				4,331
Non-cash provision for restructuring			-				1,083
Non-cash interest expense			7,054				8,697
Loss on extinguishment of debt			2,878
Unrealized foreign currency transaction loss (gain)			237				(794	)
Deferred tax provision			(886	)			6
Changes in operating assets and liabilities:
Accounts receivable			14,192				10,129
Inventories			788				294
Prepaid expenses and other assets			(3,526	)			3,724
Accounts payable			(3,661	)			3,467
Accrued expenses, compensation and benefits and other liabilities			(13,035	)			(12,453	)
Income taxes payable			372				423
Deferred revenue and contract assets			(12,631	)			(22,544	)
Net cash provided by (used in) operating activities			1,112				(4,248	)
Cash flows from investing activities:
Purchases of property and equipment			(5,629	)			(7,540	)
Increase in other long-term assets			-				(25	)
Net cash used in investing activities			(5,629	)			(7,565	)
Cash flows from financing activities:
Proceeds from long-term debt			79,286				22,688
Repayment of debt			(1,113	)			(7,808	)
Payments for repurchase of outstanding Notes			(76,269	)
Proceeds from the issuance of common stock under employee stock plans			309				266
Common stock repurchases for tax withholdings for net settlement of equity awards			(3,444	)			(957	)
Partial unwind capped call cash receipt			27				-
Payments for credit facility issuance costs			(5,979	)			-
Net cash (used in) provided by financing activities			(7,183	)			14,189
Effect of exchange rate changes on cash, cash equivalents, and restricted cash			(615	)			(358	)
Net (decrease) increase in cash, cash equivalents, and restricted cash			(12,315	)			2,018
Cash, cash equivalents and restricted cash at beginning of the period			68,094				60,433
Cash, cash equivalents and restricted cash at end of the period		$	55,779			$	62,451
Supplemental information:
Cash and cash equivalents		$	52,289			$	50,460
Restricted cash			1,664				8,500
Restricted cash included in other long-term assets			1,826				3,491
Total cash, cash equivalents and restricted cash shown in the statement of cash flows		$	55,779			$	62,451

AVID TECHNOLOGY, INC.
Supplemental Revenue Information
(unaudited - in millions)
	Sept 30,			June 30,			Sept 30,
	2019			2019			2018
Revenue Backlog*
Deferred Revenue	$	85.0		$	93.5		$	88.2
Other Backlog	358.6			351.3			370.9
Total Revenue Backlog	$	443.6		$	444.8		$	459.1
The expected timing of recognition of revenue backlog as of September 30, 2019 is as follows:
	2019			2020			2021			Thereafter			Total
Deferred Revenue	$	31.4		$	39.4		$	8.4		$	5.8		$	85.0
Other Backlog	50.4			117.2			62.2			128.8			$	358.6
Total Revenue Backlog	$	81.8		$	156.6		$	70.6		$	134.6		$	443.6
*A definition of Revenue Backlog is included in our Form 8-K filed today and the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com.

Contacts
Investor contact:
Whit Rappole
Avid
ir@avid.com
(978) 275-2032

PR contact:
Jim Sheehan
Avid
jim.sheehan@avid.com
(978) 640-3152