IntraLinks Announces Second Quarter 2012 Results

08 Aug, 2012, 16:05 ET from IntraLinks Holdings, Inc.

NEW YORK, Aug. 8, 2012 /PRNewswire/ -- IntraLinks Holdings, Inc. (NYSE: IL), a leading, global technology provider of inter-enterprise content management and collaboration solutions, today announced results for its second quarter of 2012.

"Despite weakness in Europe and a challenging global M&A environment, we delivered revenue and profitability above our guidance range, led by strength in our M&A business," said Ron Hovsepian, IntraLinks' president and CEO. "We are seeing increasing validation of the need for secure content sharing beyond the firewall, underscoring the opportunity we see in adjacent enterprise markets."

Second Quarter 2012

Total revenue was $53.8 million, compared to $53.3 million for the corresponding quarter last year.

  • Enterprise revenue was $23.4 million, compared to $22.6 million for the corresponding quarter last year.
  • M&A revenue was $21.5 million, compared to $21.0 million for the corresponding quarter last year.
  • DCM revenue was $8.9 million, compared to $9.7 million for the corresponding quarter last year.

GAAP gross margin was 69.8%, compared to 73.5% for the corresponding quarter last year. Non-GAAP gross margin was 75.7%, compared to 79.8% for the corresponding quarter last year.

GAAP operating loss was ($13.0) million, compared to a GAAP operating income of $2.1 million for the corresponding quarter last year. Non-GAAP adjusted operating income was $4.0 million, compared to $11.1 million for the corresponding quarter last year.

GAAP net loss was ($9.0) million, compared to breakeven GAAP net income for the corresponding quarter last year. GAAP net loss per share for the second quarter was ($0.17) on the basis of 54.3 million shares outstanding. In the prior year comparable period, diluted GAAP net income per share was $0.00 on the basis of 55.0 million shares outstanding.

The GAAP operating results for the period ended June 30, 2012 include an $8.4 million impairment loss on in-process capitalized software related to internal systems.

Non-GAAP adjusted net income was $0.9 million, compared to $5.7 million for the corresponding quarter last year. Non-GAAP adjusted net income per share was $0.02 on the basis of 54.7 million shares outstanding. In the corresponding quarter for the prior year, non-GAAP net income per share was $0.10 on the basis of 55.0 million shares outstanding.

Non-GAAP adjusted EBITDA was $8.5 million, compared to $16.4 million for the corresponding quarter last year.

Cash flow from operations was $17.2 million, compared to $15.9 million in the corresponding quarter last year.

Business Outlook:

Based on information available as of August 8, 2012, IntraLinks is providing guidance for the third quarter and full year 2012 as follows:

Third Quarter 2012

Revenue: $49 million to $52 million GAAP operating loss: ($4.0) million to ($6.0) million  Non-GAAP operating income: $2.0 million to $4.0 million Non-GAAP adjusted EBITDA: $6.5 million to $9.0 million GAAP net loss per share: ($0.06) to ($0.08) Non-GAAP net income per share: $0.01 to $0.03

Full Year 2012

Revenue: $202 million to $208 million GAAP operating loss: ($26.0) million to ($31.0) million  Non-GAAP operating income: $10.5 million to $15.0 million Non-GAAP adjusted EBITDA: $28.0 million to $34.0 million GAAP net loss per share: ($0.40) to ($0.42) Non-GAAP net income per share: $0.05 to $0.10

Quarterly Conference Call

In conjunction with this announcement, IntraLinks will host a conference call on Wednesday, August 8, 2012, at 5:00 p.m. Eastern Daylight Time (EDT) to discuss the company's financial results and its business outlook. To access this call, dial 866-524-3160 (domestic) or 412-317-6760 (international). A passcode is not required. The call will also be webcast live on the investor relations section on the IntraLinks website at www.intralinks.com/ir.

Following the conference call, a replay will be available until August 15, 2012, at 877-870-5176 (domestic) or 858-384-5517 (international). The passcode for the replay is 10016183. An archived webcast of the call will also be available on the investor relations section on the IntraLinks website at www.intralinks.com/ir.

About IntraLinks

IntraLinks Holdings, Inc. (IL) is a leading, global technology provider of inter-enterprise content management and collaboration solutions. Through innovative Software-as-a-Service solutions, IntraLinks solutions are designed to enable the exchange, control, and management of information between organizations securely and compliantly when working through the firewall. More than 2 million professionals at 800 of the Fortune 1000 companies depend on IntraLinks' experience. With a track record of enabling high-stakes transactions and business collaborations valued at more than $19 trillion, IntraLinks is a trusted provider of easy-to-use, enterprise strength, cloud-based collaboration solutions. For more information, visit www.intralinks.com.

Non-GAAP Financial Measures

The press release includes information about certain financial measures that are not prepared in accordance with generally accepted accounting principles in the United States ("GAAP" or "U.S. GAAP"), including non-GAAP gross profit and gross margin, non-GAAP adjusted operating income and margin, non-GAAP adjusted net income, non-GAAP adjusted net income per share, non-GAAP adjusted EBITDA and free cash flow. These non-GAAP measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies.

Management defines its non-GAAP financial measures as follows:

  • Non-GAAP gross margin represents the corresponding GAAP measure adjusted to exclude (1) stock-based compensation expense and (2) amortization of intangible assets.
  • Non-GAAP adjusted operating income represents the corresponding GAAP measure adjusted to exclude (1) stock-based compensation expense, (2) amortization of intangible assets, (3) impairment charges or asset write-offs, and (4) costs related to public stock offerings.
  • Non-GAAP adjusted net income represents the corresponding GAAP measure adjusted to exclude (1) stock-based compensation expense, (2) amortization of intangible assets, (3) impairment charges or asset write-offs, (4) costs related to debt repayments and (5) costs related to public stock offerings. Non-GAAP adjusted net income is calculated using an estimated long-term effective tax rate.
  • Non-GAAP net income per share represents non-GAAP adjusted net income defined above divided by dilutive shares outstanding.
  • Non-GAAP adjusted EBITDA represents net (loss) income adjusted to exclude (1) interest expense, (2) income tax provision (benefit), (3) depreciation and amortization, (4) amortization of intangible assets, (5) stock-based compensation expense, (6) amortization of debt issuance costs, (7) other expense (income), net, (8) impairment charges or asset write-offs, and (9) costs related to public stock offerings.
  • Free cash flow represents cash flows from operations less capital expenditures.

Management believes that these non-GAAP financial measures, when viewed with our results under U.S. GAAP and the accompanying reconciliations, provide useful information about our period-over-period growth and provide additional information that is useful for evaluating our operating performance and manage the cash needs of our business. Additionally, management believes that these non-GAAP financial measures provide a more meaningful comparison of our operating results against those of other companies in our industry, as well as on a period to-period basis, because these measures exclude items that are not representative of our operating performance, such as amortization of intangible assets, interest expense and fair value adjustments to the interest rate swap. Management believes that including these costs in our results of operations results in a lack of comparability between our operating results and those of our peers in the industry, the majority of which are not highly leveraged and do not have comparable amortization costs related to intangible assets. However, non-GAAP gross margin, non-GAAP adjusted operating income, non-GAAP adjusted net income, non-GAAP adjusted net income per share, non-GAAP adjusted EBITDA and free cash flow are not measures of financial performance under U.S. GAAP and, accordingly, should not be considered as alternatives to gross margin, operating income, net income (loss), and cash flows provided by operations as indicators of operating performance.

A reconciliation of GAAP to Non-GAAP financial measures has been provided in the financial statement tables included in the press release.

Forward Looking Statements

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  This press release contains express or implied forward-looking statements that are not based on historical information relating to, among other things, expectations and assumptions concerning management's forecast of financial performance, future business growth, and management's plans, objectives, and strategies. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. In particular, the risks and uncertainties include, among other things:  the uncertainty of our future profitability; our ability to sustain positive cash flow; periodic fluctuations in our operating results; risks related to our substantial debt balances; our ability to maintain the security and integrity of our systems; our ability to increase our penetration in our principal existing markets and expand into additional markets; our dependence on the volume of financial and strategic business transactions; our dependence on customer referrals; our ability to maintain and expand our direct sales capabilities; our ability to develop and maintain strategic relationships to sell and deliver our solutions; customer renewal rates; our ability to maintain the compatibility of our services with third-party applications; competition and our ability to maintain our average sales prices; our ability to adapt to changing technologies; interruptions or delays in our service; international risks; our ability to protect our intellectual property; costs of being a public company; and risks related to changes in laws, regulations or governmental policy including tax regulations. Further information on these and other factors that could affect our financial results is contained in our public filings with the Securities and Exchange Commission (the "SEC") from time to time, including our Annual Report on Form 10-K for the year-ended December 31, 2011 and subsequent reports.  Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

IntraLinks undertakes no obligation to update or revise the information contained in this press release, whether as a result of new information, future events or circumstances or otherwise.

IntraLinks and the IntraLinks logo are registered trademarks of IntraLinks Holdings, Inc. All rights reserved.

IntraLinks Holdings, Inc.

Consolidated Balance Sheets

(In Thousands, Except Share and per Share Data)

(unaudited)

June 30,

December 31,

2012

2011

ASSETS

Current assets:

Cash and cash equivalents

$

35,423

$

46,694

Accounts receivable, net of allowances of  $2,678 and $2,149, respectively

39,180

38,895

Investments

34,163

36,120

Deferred taxes

6,084

12,711

Prepaid expenses

6,556

4,238

Other current assets

3,939

4,567

Total current assets

125,345

143,225

Fixed assets, net

11,265

7,635

Capitalized software, net

26,030

30,287

Goodwill

215,478

215,478

Other intangibles, net

118,139

132,233

Other assets

1,314

1,483

Total assets

$

497,571

$

530,341

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

12,961

$

4,934

Accrued expenses and other current liabilities

18,291

19,846

Deferred revenue

42,705

40,309

Total current liabilities

73,957

65,089

Long term debt

75,725

91,164

Deferred taxes

22,742

39,384

Other long term liabilities

4,700

2,874

Total liabilities

177,124

198,511

Stockholders' equity:

Undesignated Preferred Stock, $0.001 par value; 10,000,000 shares authorized; 0 shares

issued and outstanding as of June 30, 2012 and December 31, 2011

-

-

Common stock, $0.001 par value; 300,000,000 shares authorized; 54,890,507 and 54,248,178 

shares issued and outstanding as of June 30, 2012 and December 31, 2011, respectively

55

54

Additional paid-in capital

415,235

411,781

Accumulated deficit

(94,669)

(80,056)

Accumulated other comprehensive (loss) income

(174)

51

Total stockholders' equity 

320,447

331,830

Total liabilities and stockholders' equity 

$

497,571

$

530,341

 

IntraLinks Holdings, Inc.

Consolidated Statement of Operations

(In Thousands, Except Share and per Share Data)

(unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2012

2011

2012

2011

Revenue

$

53,765

$

53,336

$

104,550

$

105,743

Cost of revenue

16,222

14,137

31,726

27,753

Gross profit

37,543

39,199

72,824

77,990

Operating expenses:

Product development

5,274

5,036

9,714

11,105

Sales and marketing

22,742

22,484

47,134

43,727

General and administrative

14,194

9,617

26,359

19,443

Impairment of capitalized software

8,377

-

8,377

-

Total operating expenses

50,587

37,137

91,584

74,275

(Loss) income from operations

(13,044)

2,062

(18,760)

3,715

Interest expense

1,938

2,603

4,074

5,597

Amortization of debt issuance costs

223

574

414

941

Other expense (income), net

447

(1,135)

(791)

(3,065)

Net (loss) income before income tax

(15,652)

20

(22,457)

242

Income tax (benefit) provision

(6,623)

13

(7,844)

(248)

Net (loss) income

$

(9,029)

$

7

$

(14,613)

$

490

Net (loss) income per common share

Basic

$

(0.17)

$

0.00

$

(0.27)

$

0.01

Diluted

$

(0.17)

$

0.00

$

(0.27)

$

0.01

Weighted average number of shares used in 

calculating net (loss) income per share

Basic

54,290,995

53,539,224

54,241,433

52,748,590

Diluted

54,290,995

54,994,870

54,241,433

54,302,178

IntraLinks Holdings, Inc.

Consolidated Statement of Cash Flows

(In Thousands)

(unaudited)

Six Months Ended

June 30,

2012

2011

Net (loss) income

$

(14,613)

$

490

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization

8,770

10,204

Stock-based compensation expense

3,036

3,871

Amortization of intangible assets

14,094

14,315

Amortization of deferred costs

937

941

Provision for bad debts and customer credits

1,013

338

Loss on disposal of fixed assets

15

225

Impairment of capitalized software

8,377

-

Change in deferred taxes

(10,015)

(247)

Gain on interest rate swap

(1,455)

(1,952)

Currency remeasurement loss (gain)

28

(382)

Changes in operating assets and liabilities:

Accounts receivable

(1,253)

(5,487)

Prepaid expenses and other current assets

(2,401)

(2,164)

Other assets

42

870

Accounts payable

8,034

551

Accrued expenses and other liabilities

1,604

(3,338)

Deferred revenue

2,512

3,237

Net cash provided by operating activities

18,725

21,472

Cash flows from investing activities:

Capital expenditures

(4,561)

(3,363)

Leasehold improvements

(1,358)

-

Capitalized software development costs

(10,352)

-

Purchase of short-term investments

(24,110)

(8,643)

Sale and maturity of short-term investments

25,700

-

Net cash used in investing activities

(14,681)

(12,006)

Cash flows from financing activities:

Proceeds from exercise of stock options

29

1,077

Proceeds from issuance of common stock

447

799

Offering costs paid in connection with initial public offering and follow-on offerings

-

(490)

Proceeds from follow-on offering, net of underwriting discounts and commissions

-

35,002

Repayments of outstanding financing arrangements

(224)

-

Repayments of outstanding principal on long-term debt

(15,451)

(35,163)

Net cash (used in) provided by financing activities

(15,199)

1,225

Effect of foreign exchange rate changes on cash and cash equivalents

(117)

186

Net (decrease) increase in cash and cash equivalents

(11,271)

10,877

Cash and cash equivalents at beginning of period

46,694

50,467

Cash and cash equivalents at end of period

$

35,423

$

61,344

 

IntraLinks Holdings, Inc.

Reconciliation of Non-GAAP to GAAP Financial Measures

(In Thousands, Except Share and per Share Data)

(unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

2012

2011

2012

2011

Gross profit

$

37,543

$

39,199

$

72,824

$

77,990

Gross margin

69.8%

73.5%

69.7%

73.8%

Cost of revenue - stock based compensation expense

92

37

200

108

Cost of revenue - amortization of intangible assets

3,089

3,310

6,398

6,619

Non-GAAP gross profit

$

40,724

$

42,546

$

79,422

$

84,717

Non-GAAP gross margin

75.7%

79.8%

76.0%

80.1%

(Loss) income from operations

$

(13,044)

$

2,062

$

(18,760)

$

3,715

Stock-based compensation expense

1,691

1,899

3,036

3,871

Amortization of intangible assets

6,937

7,159

14,094

14,315

Impairment of capitalized software

8,377

                 ―  

8,377

                 ―  

Costs related to public stock offerings

                 ―  

3

                 ―  

57

Non-GAAP adjusted operating income

$

3,961

$

11,123

$

6,747

$

21,958

Net (loss) income before income tax

$

(15,652)

$

20

$

(22,457)

$

242

Stock-based compensation expense

1,691

1,899

3,036

3,871

Amortization of intangible assets

6,937

7,159

14,094

14,315

Impairment of capitalized software

8,377

                 ―  

8,377

                 ―  

Costs related to debt repayments

47

                 ―  

47

                 ―  

Costs related to public stock offerings

                 ―  

3

                 ―  

57

Non-GAAP adjusted net income before tax

1,400

9,081

3,097

18,485

Non-GAAP income tax provision

532

3,360

1,177

6,671

Non-GAAP adjusted net income

$

868

$

5,721

$

1,920

$

11,814

Net (loss) income

$

(9,029)

$

7

$

(14,613)

$

490

Interest expense

1,938

2,603

4,074

5,597

Income tax (benefit) provision

(6,623)

13

(7,844)

(248)

Depreciation and amortization

4,491

5,256

8,770

10,205

Amortization of intangible assets

6,937

7,159

14,094

14,315

Stock-based compensation expense

1,691

1,899

3,036

3,871

Amortization of debt issuance costs

223

574

414

941

Other expense (income), net

447

(1,135)

(791)

(3,065)

Impairment of capitalized software

8,377

                 ―  

8,377

                 ―  

Costs related to public stock offerings

                 ―  

3

                 ―  

57

Non-GAAP adjusted EBITDA

$

8,452

$

16,379

$

15,517

$

32,163

Non-GAAP adjusted EBITDA margin

15.7%

30.7%

14.8%

30.4%

Cash flow provided by operations

$

17,197

$

15,931

$

18,725

$

21,472

Capital expenditures

(10,100)

(6,322)

16,271

(12,006)

Free cash flow

$

7,097

$

9,609

$

2,454

$

9,466

 

IntraLinks Holdings, Inc.

Reconciliation of Non-GAAP to GAAP Financial Measures - Guidance

(In Thousands)

(unaudited)

Three Months Ending

Year Ending

September 30,

December 31,

2012

2012

Gross profit

$

35,390

$

143,171

Gross margin

70.1%

69.8%

Cost of revenue - stock-based compensation expense

124

460

Cost of revenue - amortization of intangible assets

1,986

10,369

Non-GAAP gross profit

$

37,500

$

154,000

Non-GAAP gross margin

74.3%

75.1%

Loss from operations

$

(4,717)

$

(28,365)

Stock-based compensation expense

1,883

6,976

Amortization of intangible assets

5,834

25,762

Impairment of capitalized software

                                   ―  

8,377

Non-GAAP adjusted operating income

$

3,000

$

12,750

Net loss before income tax

$

(6,034)

$

(34,493)

Stock-based compensation expense

1,883

6,976

Amortization of intangible assets

5,834

25,762

Impairment of capitalized software

                                   ―  

8,377

Costs related to debt repayments

                                   ―  

47

Non-GAAP adjusted net income before tax

1,683

6,669

Non-GAAP income tax provision

640

2,534

Non-GAAP adjusted net income

$

1,044

$

4,135

Net loss

$

(3,942)

$

(22,476)

Interest expense

1,184

6,438

Income tax benefit

(2,092)

(12,017)

Depreciation and amortization

4,809

18,388

Amortization of intangible assets

5,834

25,762

Stock-based compensation expense

1,883

6,976

Amortization of debt issuance costs

177

740

Other income, net

(45)

(880)

Impairment of capitalized software

                                   ―  

8,377

Non-GAAP adjusted EBITDA

$

7,809

$

31,309

Non-GAAP adjusted EBITDA margin

15.5%

15.3%

Note: All forward-looking figures presented in this table are stated at the mid-point of the estimated range

 

SOURCE IntraLinks Holdings, Inc.



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