Avid Technology Announces Q2 2022 Results

Subscription Revenue of $34.1M, an Increase of 58.7% Year-Over-Year, Driven by Increase of Cloud-Enabled Software Subscriptions to Over 450,300

Annual Recurring Revenue of $231.0M, an Increase of 14.1% Year-Over-Year

Net Income per Common Share of $0.16 and Non-GAAP Earnings per Share of $0.26, an Increase of 4.0% Year-Over-Year

BURLINGTON, Mass., Aug. 02, 2022 (GLOBE NEWSWIRE) -- Avid® (NASDAQ: AVID), a leading technology provider that powers the media and entertainment industry, today announced its financial results for the second quarter of 2022, which ended on June 30, 2022.

Total revenue increased 3.0% year-over-year in the second quarter, led by strong subscription growth, offset by continuing macro supply chain challenges that impacted the Company’s ability to ship a significant amount of the orders received for integrated solutions during the first half of 2022. During the second quarter, the recurring components of the Company’s business remained strong with subscription revenue of $34.1 million, up 58.7% year-over-year, and subscription & maintenance revenue of $61.9 million, up 19.2% year-over-year.

The revenue growth, combined with improved gross margin, resulted in Non-GAAP Earnings per Share of $0.26.

Second Quarter 2022 Financial and Business Highlights

• Subscription revenue was $34.1 million, an increase of 58.7% year-over-year.
• Paid Cloud-enabled software subscriptions increased by 21.8% year-over-year to approximately 450,300 as of June 30, 2022, and increased by approximately 18,500 during the second quarter.
• Subscription and Maintenance revenue was $61.9 million, up 19.2% year-over-year.
• Annual Recurring Revenue was $231.0 million, an increase of 14.1% year-over-year.
• Subscription ARR was $121.2 million, an increase of 45.8% year-over-year.
• Total revenue was $97.7 million, an increase of 3.0% year-over-year.
• Gross margin was 64.9%, an increase of 150 basis points year-over-year. Non-GAAP Gross Margin was 65.5%, an increase of 160 basis points year-over-year.
• Operating expenses were $53.4 million, an increase of 4.4% year-over-year.   Non-GAAP Operating Expenses were $49.6 million, an increase of 5.4% year-over-year.
• Net income was $7.4 million, an increase of 5.2% year-over-year. Non-GAAP Net Income was $11.8 million, an increase of 1.7% year-over-year.
• Adjusted EBITDA was $16.5 million, an increase of 4.1% year-over-year. Adjusted EBITDA Margin was 16.9%, an increase of 20 basis points year-over-year.  
• Net income per common share was $0.16, an increase of 6.7% year-over-year. Non-GAAP Earnings per Share was $0.26, an increase of 4.0% year-over-year.
• Net cash provided by operating activities was $7.3 million in the quarter, an increase of $0.7 million compared to the second quarter of 2021.
• Free Cash Flow was $3.2 million in the quarter, a decrease of ($2.4) million compared to the prior year period.
• LTM Recurring Revenue % was 79.7% of the Company’s revenue for the 12 months ended June 30, 2022, up from 76.1% for the 12 months ended June 30, 2021.
• Repurchased 559,572 shares for $14.1 million during the second quarter, under the $115 million share repurchase authorization announced on September 9, 2021.
  

Jeff Rosica, Avid’s Chief Executive Officer and President, stated, “We are pleased by the continued growth from our subscription software business and continued healthy demand for our products during the second quarter.” Mr. Rosica continued, “We delivered year-over-year revenue and earnings growth in the second quarter despite having over $20 million of contractually committed orders for integrated solutions at the end of June that had not shipped in the first half due to the continued global supply chain challenges. We expect that supply chain conditions will gradually improve in the second half of 2022, resulting in favorable year-over-year growth and improved profitability in full-year 2022.”

Ken Gayron, Chief Financial Officer and Executive Vice President of Avid, added, “We continued to grow our Recurring Revenue streams and deliver profitable year-over-year growth during the second quarter.” Mr. Gayron continued, “Despite the challenges posed by supply chain, we ended the quarter with revenue and Adjusted EBITDA in line with our first half forecast and remain confident in our business trajectory and long-term model.   Additionally, we believe our strong capital and liquidity position provides flexibility in operating our business to drive long term strategic value through prudent capital allocation.”

Third Quarter and Full-Year 2022 Guidance

For the third quarter of 2022, Avid is providing guidance for revenue, Subscription & Maintenance Revenue, Non-GAAP Earnings per Share and Adjusted EBITDA. For the full-year 2022, Avid is reaffirming its guidance for Subscription & Maintenance Revenue due to the continued strong demand for these offerings. While Avid is also seeing healthy market conditions and strong demand for its integrated solutions, the impact on its integrated solutions business from the global supply chain challenges and the expected timing of the recovery from these challenges are adding variability to its full-year 2022 business plans. As a result, Avid is widening the range for full-year 2022 total revenue guidance, while keeping the same midpoint, to better reflect the range of possible outcomes for the year. Avid is adjusting its full-year guidance for Adjusted EBITDA and Non-GAAP EPS to reflect the wider revenue range. Avid is also adjusting its Free Cash Flow guidance for full-year 2022 as a result of several factors. First, Avid is seeing more rapid adoption of enterprise subscriptions globally—which is strategically important for the company and is positive for its long-term model, but which has different near term cash conversion characteristics than its individual creatives subscription business. Second, the expected timing of Avid’s integrated solutions manufacturing recovery happening later in the second half will likely lead to some cash collections from these shipments falling into early 2023. And third, to the extent it can, Avid plans to temporarily build up its inventories to a level that will provide a sufficient buffer and greater flexibility to better navigate the variability in anticipated supply chain conditions over the next several quarters, and most importantly, to better meet the strong demand the company is seeing.

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 Q2 2022 Earnings presentation posted on Avid’s Investor Relations website at ir.Avid.com.

Conference Call to Discuss Second Quarter 2022 Results on August 2, 2022

Avid will host a conference call to discuss its financial results for the second quarter 2022 on Tuesday, August 2, 2022 at 5:30 p.m. ET. Participants may join the webcast in listen-only mode and access the presentation slides using the link on the Avid Investor Relations website, which can be found on the Events & Presentations tab at ir.Avid.com. Please connect at least 5 minutes in advance to ensure a timely connection to the call. A replay of the call will also be available for a limited time and can be accessed on the Events & Presentations tab of the Avid Investor Relations website shortly after the completion of the call.

Management to Participate in the Oppenheimer 25th Annual Technology, Internet & Communications Conference on August 9

What: Oppenheimer 25th Annual Technology, Internet & Communications Conference
Participants: Jeff Rosica, Chief Executive Officer and President
                   Ken Gayron, Chief Financial Officer and EVP
Type: Group presentation and 1x1 meetings
Date: Tuesday, August 9, 2022
Group presentation time: 8:15 a.m. ET
The group presentation will be available to the public via live webcast, and a replay will be available for a limited period. For details on how to watch online, please visit the Events & Presentations tab at http://ir.avid.com.

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 Margin, Non-GAAP Operating Expenses, Non-GAAP Net Income, and Non-GAAP Earnings per Share. The Company also includes the operational metrics of Cloud-enabled software subscriptions, Annual Recurring Revenue (ARR), Subscription ARR, Recurring Revenue, LTM 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 the 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 included in the supplemental financial and operational data sheet available on our Investor Relations website at ir.Avid.com, which also includes definitions of all operational metrics.

This press release also includes expectations for future Adjusted EBITDA, Non-GAAP Earnings per Share and Free Cash Flow, which are forward-looking non-GAAP financial measures. Reconciliations of these forward-looking non-GAAP measures are not included in this press release or elsewhere, due to the high variability and difficulty in making accurate forecasts and projections of some of the information excluded from the estimation of the non-GAAP results, together with some of the excluded information not being ascertainable or accessible at this time. As a result, we are 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 includes forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include statements regarding our future financial performance or position, results of operations, business strategy, plans and objectives of management for future operations, and other statements that are not historical fact. You can identify forward-looking statements by their use of forward-looking words such as “may”, “will”, “anticipate”, “expect”, “believe”, “estimate”, “intend”, “plan”, “should”, “seek”, or other comparable terms.

Readers of this press release should understand that these forward-looking statements are not guarantees of performance or results. Forward-looking statements provide our current expectations and beliefs concerning future events and are subject to risks, uncertainties, and factors relating to our business and operations, all of which are difficult to predict and could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements.

These risks, uncertainties, and factors include, but are not limited to: risks related to the impact of the ongoing coronavirus (COVID-19) pandemic and subsequent variants on our business, suppliers, consumers, customers and employees; economic, social, and political instability, security concerns, and the risk of war, armed conflict and/or cyber conflict, particularly originating in, and complicated by, areas of heightened geopolitical tension and open conflict such as Ukraine, where we have outsourced research and development activities, Russia, and bordering territories; our liquidity; our ability to execute our strategic plan including our cost saving strategies, and to 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; risks related to the availability and prices of raw materials, including any negative effects caused by inflation, armed conflict and related sanctions, weather conditions, or health pandemics; disruptions, inefficiencies, and/or complications in our operations and/or dynamic and unpredictable global supply chain, including interruptions, delays, complications, and other impacts related to armed conflict and/or cyber conflict and related international sanctions and reprisals and the ongoing COVID-19 pandemic and subsequent variants; the costs, disruption, and diversion of management's attention due to the ongoing COVID-19 pandemic and subsequent variants, armed conflict and/or cyber conflict and related international sanctions and reprisals; the possibility of legal proceedings adverse to our Company; and other risks described in our reports filed from time to time with the U.S. Securities and Exchange Commission. 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. We caution readers not to place undue reliance on any forward-looking statements included in this press release which speak only as to the date of this press release. We undertake no responsibility to update or revise any forward-looking statements, except as required by law.

Avid Powers Greater Creators

People who create media for a living become greater creators with Avid’s award-winning technology solutions to make, manage and monetize today’s most celebrated video and audio content—from iconic movies and bingeworthy TV series, to network news and sports, to recorded music and the live stage. What began more than 30 years ago with our invention of nonlinear digital video editing has led to individual artists, creative teams and organizations everywhere subscribing to our powerful tools and collaborating securely in the cloud. We continue to re-imagine the many ways editors, musicians, producers, journalists and other content creators will bring their stories to life. Discover the possibilities at avid.com and join the conversation on social media with the multitude of brilliant creative people who choose Avid for a lifetime of success.

© 2022 Avid Technology, Inc., Avid and its logo are property of Avid. All rights reserved. Other trademarks are property of their respective owners.

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