IntraLinks Announces Second Quarter 2012 Results

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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