Intralinks Announces Second Quarter 2013 Results M&A Revenue increases 23% year-over-year

Launched Intralinks VIA™ cloud service for secure, beyond-the-firewall collaboration

NEW YORK, Aug. 6, 2013 /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 2013.

"We delivered revenue and profitability above our guidance range, driven by continued strong M&A revenue growth," said Ron Hovsepian, Intralinks' president and CEO. "Our M&A sales and marketing programs, along with our leading M&A platform and customer service, continue to drive our growth."

"We are encouraged by our early progress in repositioning our enterprise business and are seeing positive market reaction to Intralinks VIA, our new cloud service for secure, beyond-the-firewall enterprise collaboration. We believe that our enterprise business represents our most significant long-term revenue growth opportunity today and our standing as a trusted supplier of secure collaboration solutions positions us well for success."

Second Quarter 2013

Total revenue was $57.7 million, compared to $53.8 million for the corresponding quarter last year.

  • Enterprise revenue was $23.6 million, compared to $23.4 million for the corresponding quarter last year.
  • M&A revenue was $26.3 million, compared to $21.5 million for the corresponding quarter last year.
  • DCM revenue was $7.8 million, compared to $8.9 million for the corresponding quarter last year.

GAAP (generally accepted accounting principles) gross margin was 71.9%, compared to 69.8% for the corresponding quarter last year. Non-GAAP gross margin was 75.8%, compared to 75.7% for the corresponding quarter last year.

GAAP operating loss was ($4.2) million, compared to ($13.0) million for the corresponding quarter last year. Non-GAAP adjusted operating income was $3.8 million, compared to $4.0 million for the corresponding quarter last year.

GAAP net loss was ($4.4) million, compared to ($9.0) million for the corresponding quarter last year. GAAP net loss per share for the second quarter was ($0.08) on the basis of 55.0 million shares outstanding. In the comparable period of the prior year, GAAP net loss per share was ($0.17) on the basis of 54.3 million shares outstanding.

Non-GAAP adjusted net income was $1.5 million, compared to $0.9 million for the corresponding quarter last year. Non-GAAP adjusted net income per share was $0.03 on the basis of 55.4 million shares outstanding. In the corresponding quarter for the prior year, non-GAAP adjusted net income per share was $0.02 on the basis of 54.7 million shares outstanding.

Non-GAAP adjusted EBITDA was $8.8 million, compared to $8.5 million for the corresponding quarter last year.

Cash, restricted cash and investments were $78.6 million at the end of the quarter, up from $75.3 million at the end of last year.

Business Outlook:

Based on information available as of August 6, 2013, Intralinks is providing guidance for the third quarter and full year 2013 as follows:

Third Quarter 2013

Revenue: $53.5 million to $55.5 million
GAAP operating loss: ($4.0) million to ($5.5) million 
Non-GAAP adjusted operating income: $2.0 million to $3.5 million
Non-GAAP adjusted EBITDA: $7.5 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 2013

Revenue: $221 million to $225 million
GAAP operating loss: ($14.8) million to ($17.8) million 
Non-GAAP adjusted operating income: $14.0 million to $17.0 million
Non-GAAP adjusted EBITDA: $34 million to $37 million
GAAP net loss per share: ($0.22) to ($0.25)
Non-GAAP net income per share: $0.10 to $0.14

Quarterly Conference Call

In conjunction with this announcement, Intralinks will host a conference call on Tuesday, August 6, 2013, at 5:00 p.m. Eastern Time (ET) to discuss the company's financial results and its business outlook.  To access this call, dial 877-300-8521 (domestic) or 412-317-6026 (international). A passcode is not required. The call will also be webcast live on the investor relations section of the Intralinks website at www.intralinks.com/ir. In conjunction with this call, there will also be slides with supplemental information available at that same website location.

Following the conference call, a replay will be available until August 13, 2013, at 877-870-5176 (domestic) or 858-384-5517 (international). The passcode for the replay is 10031308. 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. (NYSE: 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 secure and compliant exchange, control, and management of information between organizations when working through the firewall. More than 2.7 million professionals at 99% 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 $23.5 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

This 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 and non-GAAP adjusted EBITDA. 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, if any.
  • 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, if any.
  • 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, if any.  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, if any.
  • Free cash flow represents cash flow from operations less capital expenditures and capitalized software development costs.

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.  In addition, free cash flow provides management with useful information for managing the cash needs of our business.  Management also 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 this 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 from time to time, including our Annual Report on Form 10-K for the year-ended December 31, 2012.  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, Inc. © 2013. All rights reserved.


Intralinks Holdings, Inc.


Consolidated Balance Sheets
(In Thousands, Except Share and per Share Data)
(unaudited)




June 30,
2013


December 31,
2012

ASSETS





Current assets:





Cash and cash equivalents


$

42,476



$

43,798


Accounts receivable, net of allowances of $3,343 and $2,927, respectively


38,848



37,667


Investments


33,621



31,549


Deferred taxes


8,981



7,469


Restricted cash


2,464




Prepaid expenses and other current assets


11,557



8,992


    Total current assets


137,947



129,475


Fixed assets, net


11,451



10,645


Capitalized software, net


29,839



26,295


Goodwill


215,869



215,478


Other intangibles, net


95,481



106,750


Other assets


735



1,111


    Total assets


$

491,322



$

489,754


LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





Accounts payable


$

12,012



$

4,451


Accrued expenses and other current liabilities


19,731



20,320


Deferred revenue


44,766



40,719


Current portion of long term debt


75,533



1,030


    Total current liabilities


152,042



66,520


Long term debt


192



75,238


Deferred taxes


17,523



21,135


Other long term liabilities


4,616



4,809


Total liabilities


174,373



167,702


Stockholders' equity:





Undesignated Preferred Stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding as of June 30, 2013 and December 31, 2012





Common Stock, $0.001 par value; 300,000,000 shares authorized; 55,582,494 and 55,486,651 shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively


56



55


Additional paid-in capital


423,876



419,618


Accumulated deficit


(106,349)



(97,436)


Accumulated other comprehensive loss


(634)



(185)


    Total stockholders' equity


316,949



322,052


    Total liabilities and stockholders' equity


$

491,322



$

489,754


 


Intralinks Holdings, Inc.


Consolidated Statements of Operations
(In Thousands, Except Share and per Share Data)
(unaudited)




















Three Months Ended June 30,



Six Months Ended June 30,




2013




2012




2013




2012

Revenue


$

57,742



$

53,765



$

112,763



$

104,550


Cost of revenue


16,223



16,222



31,790



31,726


Gross profit


41,519



37,543



80,973



72,824


Operating expenses:









Product development


4,680



5,274



9,358



9,714


Sales and marketing


27,275



22,742



52,188



47,134


General and administrative


13,719



14,194



27,857



26,359


Impairment of capitalized software




8,377





8,377


Total operating expenses


45,674



50,587



89,403



91,584


    Loss from operations


(4,155)



(13,044)



(8,430)



(18,760)


Interest expense


1,152



1,938



2,274



4,074


Amortization of debt issuance costs


104



223



216



414


Other expense (income), net


189



447



968



(791)


Net loss before income tax


(5,600)



(15,652)



(11,888)



(22,457)


Income tax benefit


(1,242)



(6,623)



(2,975)



(7,844)


Net loss


$

(4,358)



$

(9,029)



$

(8,913)



$

(14,613)


Net loss per common share









    Basic


$

(0.08)



$

(0.17)



$

(0.16)



$

(0.27)


    Diluted


$

(0.08)



$

(0.17)



$

(0.16)



$

(0.27)


Weighted average number of shares used in calculating
net loss per share









    Basic


55,018,219



54,290,995



54,966,284



54,241,433


    Diluted


55,018,219



54,290,995



54,966,284



54,241,433


 

 


Intralinks Holdings, Inc.


Consolidated Statements of Cash Flows
(In Thousands)
(unaudited)




Six Months Ended June 30,




2013




2012

Net loss


$

(8,913)



$

(14,613)


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





Depreciation and amortization


9,852



8,770


Stock-based compensation expense


4,128



3,036


Amortization of intangible assets


11,811



14,094


Amortization of deferred costs


796



937


Provision for bad debts and customer credits


711



1,013


Loss on disposal of fixed assets




15


Impairment of capitalized software




8,377


Change in deferred taxes


(4,840)



(10,015)


Gain on interest rate swap




(1,455)


Currency remeasurement (gain) loss


(80)



28


Changes in operating assets and liabilities:





Accounts receivable


(1,875)



(1,253)


Prepaid expenses and other current assets


(3,081)



(2,401)


Other assets


330



42


Accounts payable


7,595



8,034


Accrued expenses and other liabilities


(511)



1,604


Deferred revenue


3,834



2,512


Net cash provided by operating activities


19,757



18,725


Cash flows from investing activities:





Capital expenditures


(3,289)



(5,919)


Restricted cash


(2,464)




Acquisition


(602)




Capitalized software development costs


(10,836)



(10,352)


Purchase of short-term investments


(24,990)



(24,110)


Maturity of short-term investments


22,446



25,700


Net cash used in investing activities


(19,735)



(14,681)


Cash flows from financing activities:





Proceeds from exercise of stock options and issuance of common stock


131



476


Repayments of outstanding financing arrangements


(556)



(224)


Repayments of outstanding principal on long-term debt


(410)



(15,451)


Net cash used in financing activities


(835)



(15,199)


Effect of foreign exchange rate changes on cash and cash equivalents


(509)



(116)


Net decrease increase in cash and cash equivalents


(1,322)



(11,271)


Cash and cash equivalents at beginning of period


43,798



46,694


Cash and cash equivalents at end of period


$

42,476



$

35,423


 


Intralinks Holdings, Inc.


Reconciliation of Non-GAAP to GAAP Financial Measures
(In Thousands, Except Share and per Share Data)
(unaudited)






Three Months Ended June 30,



Six Months Ended June 30,





2013




2012




2013




2012


Gross profit


$

41,519



$

37,543



$

80,973



$

72,824


Gross margin


71.9

%


69.8

%


71.8

%


69.7

%

Cost of revenue – stock-based compensation expense


149



92



317



200


Cost of revenue – amortization of intangible assets


2,081



3,089



4,069



6,398


Non-GAAP Gross profit


$

43,749



$

40,724



$

85,359



$

79,422


Non-GAAP Gross margin


75.8

%


75.7

%


75.7

%


76.0

%

Loss from operations


$

(4,155)



$

(13,044)



$

(8,430)



$

(18,760)


Stock-based compensation expense


2,012



1,691



4,128



3,036


Amortization of intangible assets


5,967



6,937



11,811



14,094


Impairment of capitalized software






8,377







8,377


Non-GAAP adjusted Operating income


$

3,824



$

3,961



$

7,509



$

6,747


Net loss before income tax


$

(5,600)



$

(15,652)



$

(11,888)



$

(22,457)


Stock-based compensation expense


2,012



1,691



4,128



3,036


Amortization of intangible assets


5,967



6,937



11,811



14,094


Impairment of capitalized software




8,377





8,377


Cost related to debt repayments




47





47


Non-GAAP adjusted net income before tax


2,379



1,400



4,051



3,097


Non-GAAP income tax provision


904



532



1,539



1,177


Non-GAAP adjusted net income


$

1,475



$

868



$

2,512



$

1,920


Net loss


$

(4,358)



$

(9,029)



$

(8,913)



$

(14,613)


Interest expense


1,152



1,938



2,274



4,074


Income tax benefit


(1,242)



(6,623)



(2,975)



(7,844)


Depreciation and amortization


5,021



4,491



9,852



8,770


Amortization of intangible assets


5,967



6,937



11,811



14,094


Stock-based compensation expense


2,012



1,691



4,128



3,036


Impairment of capitalized software




8,377





8,377


Amortization of debt issuance costs


104



223



216



414


Other expense (income), net


189



447



968



(791)


Non-GAAP adjusted EBITDA


$

8,845



$

8,452



$

17,361



$

15,517


Non-GAAP adjusted EBITDA margin


15.3

%


15.7

%


15.4

%


14.8

%

Cash flow provided by operations


$

11,826



$

17,197



$

19,757



$

18,725


Capital expenditures


(1,475)



(5,517)



(3,289)



(5,919)


Capitalized software development costs


(5,480)



(4,583)



(10,836)



(10,352)


Free cash flow


$

4,871



$

7,097



$

5,632



$

2,454


 

Intralinks Holdings, Inc.


Reconciliation of Non-GAAP to GAAP Financial Measures - Guidance
(In Thousands)
(unaudited)




Three Months Ending

September 30, 2013


Year Ending

December 31,

2013

Gross profit


$

38,213



$

158,601


Gross margin


70.1

%


71.1

%

Cost of revenue - stock-based compensation expense


133



666


Cost of revenue - amortization of intangible assets


1,984



7,983


Non-GAAP gross profit


$

40,330



$

167,250


Non-GAAP gross margin


74.0

%


75.0

%






Loss from operations


$

(4,750)



$

(16,300)


Stock-based compensation expense


1,666



8,320


Amortization of intangible assets


5,834



23,480


Non-GAAP adjusted operating income


$

2,750



$

15,500







Net loss before income tax


$

(6,225)



$

(21,500)


Stock-based compensation expense


1,666



8,320


Amortization of intangible assets


5,834



23,480


Non-GAAP adjusted net income before tax


1,275



10,300


Non-GAAP income tax expense


484



3,914


Non-GAAP adjusted net income


$

791



$

6,386







Net loss


$

(3,710)



$

(13,330)


Interest expense


1,127



4,533


Income tax benefit


(2,365)



(8,170)


Depreciation and amortization


5,500



20,000


Amortization of intangible assets


5,834



23,480


Stock-based compensation expense


1,666



8,320


Amortization of debt issuance costs


73



358


Other expense, net


125



309


Non-GAAP adjusted EBITDA


$

8,250



$

35,500


Non-GAAP adjusted EBITDA margin


15.1

%


15.9

%


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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