Actuate Reports Fourth Quarter and Fiscal Year 2005 Financial Results; Q4 Revenues of $29.2 Million with Non-GAAP EPS of $0.06; FY05 EPS up 800% to $0.18; Record 13.9% FY05 Non-GAAP Operating Margin
SOUTH SAN FRANCISCO, Calif.--Jan. 31, 2006--Actuate Corporation , the world leader in Enterprise Reporting and Performance Management Applications, today announced its financial results for the quarter and year ended December 31, 2005. Revenues for the fourth quarter of 2005 were $29.2 million, up 9% sequentially from the third quarter of 2005 and up 7% from the fourth quarter of 2004. License revenues for the quarter were $10.3 million, an increase of 16% compared with $8.9 million in Q3 2005. Fourth quarter 2005 GAAP net income was $4.1 million, or $0.07 per diluted share, compared with net income of $1.2 million or $0.02 per diluted share in the year-ago quarter.Non-GAAP operating margin for the fourth quarter of 2005 was 15% compared with a non-GAAP operating margin of 13% for the fourth quarter of 2004. Fourth quarter 2005 non-GAAP net income was $3.5 million, or $0.06 per diluted share, compared with non-GAAP net income of $2.5 million or $0.04 per diluted share in the year-ago quarter.
For the fiscal year 2005, revenues totaled $106.4 million, compared with $104.7 million in fiscal year 2004. GAAP net income for fiscal year 2005 was $11.6 million, or $0.18 per diluted share, compared with GAAP net income of $1.3 million, or $0.02 per diluted share in fiscal year 2004. Non-GAAP net income for fiscal year 2005 was $11.1 million, an increase of $6.7 million compared with the $4.4 million of non-GAAP net income reported for fiscal year 2004. Diluted non-GAAP net income per share was $0.18 for fiscal year 2005, an increase of 157% compared with $0.07 per diluted share recorded in fiscal year 2004.
Non-GAAP financial measures discussed in this release exclude the amortization of purchased technology and other intangibles, loss on investment, restructuring costs, amortization of deferred compensation, nonrecurring legal costs and an adjustment to the tax provision. All of these expenses are included in Actuate's GAAP results. The income tax rate used to compute third and fourth quarter 2005 non-GAAP net income was 30%. The income tax rate used to compute non-GAAP net income for fiscal year 2004 and the first six months of 2005 was 37.5%.
Cash, cash equivalents and short-term investments at December 31, 2005 totaled $54.4 million, an increase of $7.1 million compared with $47.3 million at December 31, 2004. Deferred revenue at December 31, 2005 was $32.4 million, compared with $28.8 million at December 31, 2004.
"In 2005, Actuate's renewed strategic focus and heightened financial discipline resulted in improved business fundamentals," said Pete Cittadini, Actuate's president and CEO. "We achieved four consecutive quarters of increasing revenues, grew EPS 800% year over year, and beat our goal for cash flow from operations."
"Our strong financial position will serve as a solid platform upon which to continue our company's transition. We are optimistic that the initiatives we launched in 2005 will serve as growth opportunities for 2006. These include the Customer Self-Service and Financial Performance Management solution categories, which uniquely fulfill our customers' needs and continue to encompass an increasing share of our business. We believe the high number of BIRT and Actuate BIRT downloads in 2005 reflect an escalating level of excitement and interest within the worldwide community of enterprise application developers. Finally, our recent acquisition of performancesoft provides our customers with capabilities to dramatically improve their corporate performance. We are gratified to be able to bring these exciting enhancements to our customers and, as always, their success is our primary goal."
2005 Financial Highlights
-- Non-GAAP operating income increased 136% compared with fiscal 2004;
-- Non-GAAP operating margin reached 13.9%, a record annual level;
-- Non-GAAP EPS increased 157% to $0.18, compared with $0.07 in 2004;
-- Achieved a record 66% services margin (combined margin of maintenance, support and consulting services), compared with 60% in 2004;
-- Generated $13.3 million in cash flow from operations.
-- Repurchased 3.0 million shares at a total cost of $7.1 million.
Q4 Customer Highlights
During Q4 2005, Actuate received significant new and repeat business from, among others, American Suzuki, BEA Systems, Bank of America, California ISO, Chordiant Software, Citigroup, Deka Bank, DWS Investments, Educational Testing Service, Federal Reserve Bank of Richmond, Harland Financial, IBM, MetLife, National Aeronautics and Space Administration, Nationwide, Odyssey Software, PNC Bank, Siebel Systems, Sprint, TIAA-CREF and UBS AG.
Other Q4 Highlights
During the fourth quarter, Actuate:
-- Announced the first Spreadsheet Application Platform that gives corporations the ability to securely automate the production, distribution, updates, workflow and collaboration associated with enterprise-wide spreadsheet processes.
-- Exceeded 100,000 downloads of BIRT and Actuate BIRT for 2005.
-- Placed among the FinTech 100, a ranking of top 100 international application and service providers in the financial services industry by American Banker and Financial Insights.
-- Announced Actuate Financial Performance Management (FPM) 2.0, the first solution to use a spreadsheet interface to automate the production, distribution, updates, workflow, and collaboration associated with financial performance management.
-- Announced integration with IBM Workplace for Business Strategy Execution to help all employees execute on corporate strategy.
Acquisition of performancesoft, Inc.
On January 6, 2006, Actuate Corporation announced that it had acquired privately-held performancesoft, Inc., of Toronto, Ontario, Canada, a leading provider of Performance Management Solutions software and services. The acquisition was an all-cash transaction with an initial purchase price of US$16.5 million, payable at closing, and additional contingent cash consideration of up to US$13.5 million (based on achievement of certain revenue and operating margin targets for 2006) payable in 2007 and will be accounted for under the purchase method of accounting. On a non-GAAP basis, excluding amortization of intangibles, purchased in-process research and development costs, stock option compensation, restructuring costs and other non-recurring costs, Actuate expects the acquisition to be accretive to earnings by the fourth quarter of 2006 and approximately breakeven for the full year of 2006.
Use of Non-GAAP Financial Measures
The non-GAAP financial measures discussed in the text of this press release and accompanying non-GAAP supplemental information represent financial measures used by Actuate's management to evaluate the operating performance of the Company and to conduct its business operations. Non-GAAP financial measures discussed in this release exclude the amortization of purchased technology and other intangibles, loss on investment, restructuring costs, amortization of deferred compensation, nonrecurring legal costs and an adjustment to the tax provision. It is management's belief that these items are not indicative of ongoing operations and as a result, non-GAAP financial measures that exclude such items provide additional insight for investors in evaluating the Company's financial and operational performance. However, these non-GAAP financial measures are not intended to be an alternative to financial measures prepared in accordance with GAAP. Pursuant to the requirements of SEC Regulation G, a detailed reconciliation between the Company's GAAP and non-GAAP financial results is provided in this press release and investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in the Company's SEC filings. Additionally, the non-GAAP reconciliation will be available in the investor relations section of Actuate's website at www.actuate.com.
Conference Call Information
Actuate will be holding a conference call at 2:00 p.m. Pacific Time, today, January 31, 2006 to further discuss these results. The dial-in number for the call is 973-528-0008. The conference call will be simultaneously broadcast live in the Investor Relations section of Actuate's web site at http://phx.corporate-ir.net/phoenix.zhtml?c=64401&p=irol-irhome and will be available as an archived replay at the same location until approximately February 13, 2006.
About Actuate Corporation
Actuate Corporation is the world leader in Enterprise Reporting and Performance Management Applications that empower 100% of users to achieve breakthrough corporate performance. Actuate provides the most scalable, reliable, flexible and high-performing reporting capabilities for every application in the enterprise. Customers use Actuate to deliver information in context to users inside and outside the firewall as Performance Management and Customer Self-Service applications, managed spreadsheet applications and Java reporting applications.
Actuate has over 3,500 customers globally in a range of industries including banking, insurance, manufacturing, communications, and government. Founded in 1993, Actuate has headquarters in South San Francisco, Calif., with offices worldwide. Actuate is listed on the NASDAQ exchange under the symbol ACTU. For more information on Actuate, visit the company's Web site at www.actuate.com.
Cautionary Note Regarding Forward Looking Statements: The statements contained in this press release that are not purely historical are forward looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These include statements regarding Actuate's expectations, beliefs, hopes, intentions or strategies regarding the future. All such forward-looking statements are based upon information available to Actuate as of the date hereof, and Actuate disclaims any obligation to update or revise any such forward-looking statements based on changes in expectations or the circumstances or conditions on which such expectations may be based. Actual results could differ materially from Actuate's current expectations. Factors that could cause or contribute to such differences include, but are not limited to, the general spending environment for information technology products and services in general and Enterprise Reporting Application software in particular, quarterly fluctuations in our revenues and other operating results, our ability to expand our international operations, our ability to successfully compete against current and future competitors, the impact of future acquisitions (including the performancesoft, Inc. acquisition) on the company's financial and/or operating condition, the ability to increase revenues through our indirect channels, general economic and geopolitical uncertainties and other risk factors that are discussed in Actuate's Securities and Exchange Commission filings, specifically Actuate's 2004 Annual Report on Form 10-K filed on March 16, 2005 and Quarterly Reports on Form 10-Q filed on May 1, 20060, 2005, August 9, 2005 and November 9, 2005.
Copyright(C) 2006 Actuate Corporation. All rights reserved. Actuate and the Actuate logo are registered trademarks of Actuate Corporation and/or its affiliates in the U.S. and certain other countries. All other brands, names or trademarks mentioned may be trademarks of their respective owners.
ACTUATE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
December 31, December 31,
2005 2004
------------ ------------
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $ 54,397 $ 47,273
Accounts receivable, net 26,798 24,776
Other current assets 2,911 2,498
--------- ---------
Total current assets 84,106 74,547
Property and equipment, net 4,716 6,158
Goodwill and other intangibles, net 22,129 23,883
Other assets 630 867
--------- ---------
$111,581 $105,455
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,101 $ 2,414
Current portion of restructuring liabilities 2,948 3,669
Accrued compensation 5,306 5,244
Other accrued liabilities 3,108 4,996
Income taxes payable 279 539
Deferred revenue 31,475 27,323
--------- ---------
Total current liabilities 45,217 44,185
--------- ---------
Long term liabilities:
Deferred rent 198 320
Deferred revenue 913 1,440
Restructuring liabilities and other 9,885 12,565
--------- ---------
Total long term liabilities 10,996 14,325
--------- ---------
Stockholders' equity 55,368 46,945
--------- ---------
$111,581 $105,455
========= =========
ACTUATE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
----------------- ------------------
2005 2004 2005 2004
-------- -------- --------- ---------
Revenues:
License fees $10,292 $10,913 $ 36,939 $ 42,703
Services 18,869 16,453 69,462 61,954
-------- -------- --------- ---------
Total revenues 29,161 27,366 106,401 104,657
-------- -------- --------- ---------
Costs and expenses:
Cost of license fees 490 867 2,294 3,417
Cost of services 6,452 6,075 23,723 24,763
Sales and marketing 10,506 10,211 37,070 41,296
Research and development 4,163 4,300 16,533 19,847
General and administrative 3,182 2,791 13,115 10,856
Amortization of other
intangibles - 276 487 1,110
Restructuring charges (86) 1,420 665 2,006
-------- -------- --------- ---------
Total costs and expenses 24,707 25,940 93,887 103,295
-------- -------- --------- ---------
Income from operations 4,454 1,426 12,514 1,362
Interest and other income, net 527 527 1,436 822
-------- -------- --------- ---------
Income before income taxes 4,981 1,953 13,950 2,184
Provision for income taxes 852 725 2,359 886
-------- -------- --------- ---------
Net income $ 4,129 $ 1,228 $ 11,591 $ 1,298
======== ======== ========= =========
Basic net income per share $ 0.07 $ 0.02 $ 0.19 $ 0.02
======== ======== ========= =========
Shares used in basic per share
calculation. 60,185 61,790 61,057 61,577
======== ======== ========= =========
Diluted net income per share $ 0.07 $ 0.02 $ 0.18 $ 0.02
======== ======== ========= =========
Shares used in diluted per share
calculation 63,359 64,475 63,269 65,202
======== ======== ========= =========
ACTUATE CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)
Three Months Ended Three Months Ended
December 31, 2005 December 31, 2004
--------------------------- ---------------------------
Adjust- Adjust-
GAAP ments Non-GAAP GAAP ments Non-GAAP
-------- -------- -------- -------- -------- --------
Revenues:
License fees $10,292 - $10,292 $10,913 - $10,913
Services 18,869 - 18,869 16,453 - 16,453
-------- -------- -------- --------
Total revenues 29,161 - 29,161 27,366 - 27,366
-------- -------- -------- --------
Costs and
expenses:
Cost of
license fees 490 (115)(a) 375 867 (383)(a) 484
Cost of
services 6,452 - 6,452 6,075 - 6,075
Sales and
marketing 10,506 10,506 10,211 - 10,211
Research and
development 4,163 - 4,163 4,300 - 4,300
General and
admin-
istrative 3,182 - 3,181 2,791 - 2,791
Amortization
of other
intangibles - - - 276 (276) -
Restructuring
charges (86) 86 - 1,420 (1,420) -
-------- -------- -------- --------
Total costs
and expenses 24,707 - 24,677 25,940 - 23,861
-------- -------- -------- --------
Income from
operations 4,454 - 4,484 1,426 - 3,505
Interest and
other income,
net 527 - 527 527 - 527
-------- -------- -------- --------
Income before
income taxes 4,981 - 5,011 1,953 - 4,032
Provision for
income taxes 852 652(b) 1,504 725 787(b) 1,512
-------- -------- -------- --------
Net income $ 4,129 - $ 3,507 $ 1,228 - $ 2,520
======== ======== ======== ========
Basic net
income per
share $ 0.07 - $ 0.06 $ 0.02 - $ 0.04
======== ======== ======== ========
Shares used in
basic per
share
calculation. 60,185 60,185 61,790 61,790
======== ======== ======== ========
Diluted net
income per
share $ 0.07 - $ 0.06 $ 0.02 - $ 0.04
======== ======== ======== ========
Shares used in
diluted per
share
calculation 63,359 63,359 64,475 64,475
======== ======== ======== ========
(a) Amortization of purchased technology.
(b) The provision for income taxes used in arriving at the non-GAAP
net income for all of the periods presented was computed using an
income tax rate of 30% and 37.5% for fiscal years 2005 and 2004,
respectively. The amount of provision for income taxes used in
arriving at the non- GAAP net income does not necessarily reflect
the actual or future expected provision for income taxes.
ACTUATE CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
(unaudited)
Twelve Months Ended Twelve Months Ended
December 31, 2005 December 31, 2004
--------------------------- -----------------------------
Adjust- Adjust-
GAAP ments Non-GAAP GAAP ments Non-GAAP
--------- ------- --------- --------- ------- ----------
Revenues:
License
fees $ 36,939 $ 36,939 $ 42,703 $ 42,703
Services 69,462 69,462 61,954 61,954
--------- --------- -------- ---------
Total
revenues 106,401 106,401 104,657 104,657
--------- --------- -------- ---------
Costs and
expenses:
Cost of
license fees 2,294 (914)(a) 1,380 3,417 (1,532)(a) 1,885
Cost of
services 23,723 23,723 24,763 24,763
Sales and
marketing 37,070 37,070 41,296 41,296
Research and
development 16,533 16,533 19,847 (96)(b) 19,751
General and
admin-
istrative 13,115 (186)(c) 12,929 10,856 (145)(c) 10,711
Amortization
of other
intangibles 487 (487) - 1,110 (1,110) -
Restructuring
charges 665 (665) - 2,006 (2,006) -
--------- --------- -------- ---------
Total costs
and expenses 93,887 91,635 103,295 98,406
--------- --------- -------- ---------
Income from
operations 12,514 14,766 1,362 6,251
Interest and
other
income, net 1,436 301(d) 1,737 822 822
--------- --------- -------- ---------
Income before
income taxes 13,950 16,503 2,184 7,073
Provision for
income taxes 2,359 3,071(e) 5,430 886 1,766(e) 2,652
--------- --------- -------- ---------
Net income $ 11,591 $ 11,073 $ 1,298 $ 4,421
========= ========= ========= =========
Basic net
income per
share $ 0.19 $ 0.18 $ 0.02 $ 0.07
========= ========= ========= =========
Shares used
in basic
per share
calculation 61,057 61,057 61,577 61,577
========= ========= ========= =========
Diluted net
income per
share $ 0.18 $ 0.18 $ 0.02 $ 0.07
========= ========= ========= =========
Shares used
in diluted
per share
calculation 63,269 63,269 65,202 65,202
========= ========= ========= =========
(a) Amortization of purchased technology.
(b) Amortization of deferred compensation.
(c) Legal costs related to the litigation with MicroStrategy.
(d) Loss on investment.
(e) The provision for income taxes used in arriving at the non-GAAP
net income for the first six months of fiscal year 2005 was
computed using an income tax rate of 37.5% and 30% for the third
and fourth quarters of fiscal year 2005. The provision for income
taxes used in arriving at the Non-GAAP net income for all of the
periods presented for fiscal year 2004 was computed using an
income tax rate of 37.5%. The amount of provision for income taxes
used in arriving at the non-GAAP net income does not reflect the
actual or future expected provision for income taxes.
ACTUATE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Twelve Months Ended
December 31,
2005 2004
--------- ---------
Operating activities
Net Income $ 11,591 $ 1,298
Adjustments to reconcile net income to net cash
from operating activities:
Amortization of deferred compensation - 96
Amortization of other intangibles 1,400 2,642
Depreciation 1,892 2,293
Tax benefit from exercise of stock options 2,117 880
Loss on investment 301 -
Changes in operating assets and liabilities:
Accounts receivable (2,022) (4,568)
Other current assets (431) 5
Accounts payable 214 (344)
Accrued compensation 62 842
Other accrued liabilities (1,888) 613
Income taxes payable (67) (702)
Deferred rent liabilities (122) (69)
Restructuring liabilities (3,402) (1,028)
Deferred revenue 3,625 2,973
--------- ---------
Net cash provided by operating activities 13,270 4,931
--------- ---------
Investing activities
Purchases of property and equipment (450) (3,354)
Proceeds from maturity of short-term
investments 71,783 75,038
Purchases of short-term investments (73,812) (75,450)
Purchases of minority shares of Actuate Japan (366) -
Net change in other assets (46) 671
--------- ---------
Net cash used in investing activities (2,891) (3,095)
--------- ---------
Financing activities
Proceeds from issuance of common stock 1,959 2,372
Stock repurchases (7,078) (2,690)
--------- ---------
Net cash used in financing activities (5,119) (318)
--------- ---------
Net increase in cash and cash equivalents 5,260 1,518
Effect of exchange rate on cash (111) (27)
Cash and cash equivalents at the beginning of the
period 7,341 5,850
--------- ---------
Cash and cash equivalents at the end of the
period $ 12,490 $ 7,341
========= =========