IntraLinks Announces Third Quarter 2012 Results

Nov 07, 2012, 16:02 ET from IntraLinks Holdings, Inc.

NEW YORK, Nov. 7, 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 third quarter of 2012.

"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 continue to win share in the M&A market, and we are making  progress on the initiatives we have undertaken to bolster our strategic transactions business and capture the longer-term enterprise opportunity for beyond the firewall content sharing and collaboration."

Third Quarter 2012

Total revenue was $54.8 million, compared to $54.8 million for the corresponding quarter last year.

  • Enterprise revenue was $23.8 million, compared to $24.5 million for the corresponding quarter last year.
  • M&A revenue was $23.9 million, compared to $21.5 million for the corresponding quarter last year.
  • DCM revenue was $7.0 million, compared to $8.3 million for the corresponding quarter last year.

GAAP gross margin was 72.2%, compared to 73.7% for the corresponding quarter last year. Non-GAAP gross margin was 76.1%, compared to 79.9% for the corresponding quarter last year.

GAAP operating loss was ($1.8) million, compared to a GAAP operating income of $2.8 million for the corresponding quarter last year. Non-GAAP adjusted operating income was $5.8 million, compared to $12.8 million for the corresponding quarter last year.

GAAP net loss was ($1.3) million, compared to $0.8 million net income for the corresponding quarter last year. GAAP net loss per share for the third quarter was ($0.02) on the basis of 54.4 million shares outstanding. In the prior year comparable period, diluted GAAP net income per share was $0.01 on the basis of 54.6 million shares outstanding.

Non-GAAP adjusted net income was $3.2 million, compared to $6.0 million for the corresponding quarter last year. Non-GAAP adjusted net income per share was $0.06 on the basis of 54.9 million shares outstanding. In the corresponding quarter for the prior year, non-GAAP net income per share was $0.11 on the basis of 54.6 million shares outstanding.

Non-GAAP adjusted EBITDA was $10.6 million, compared to $18.0 million for the corresponding quarter last year.

Cash flow from operations was $2.5 million, compared to $13.6 million in the corresponding quarter last year.

Business Outlook:

Based on information available as of November 7, 2012, IntraLinks is providing guidance for the fourth quarter 2012 as follows:

Fourth Quarter 2012

Revenue: $50 million to $53 million GAAP operating loss: ($3.0) million to ($5.0) million  Non-GAAP adjusted operating income: $3.0 million to $5.0 million Non-GAAP adjusted EBITDA: $7.5 million to $9.5 million GAAP net loss per share: ($0.07) to ($0.09) Non-GAAP net income per share: $0.02 to $0.04

Quarterly Conference Call

In conjunction with this announcement, IntraLinks will host a conference call on Wednesday, November 7, 2012, at 5:00 p.m. Eastern Standard Time (EST) 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 November 14, 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. The innovative Software-as-a-Service solutions of IntraLinks 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)

 

September 30, 2012

December 31, 2011

ASSETS

Current assets:

Cash and cash equivalents

$

31,076

$

46,694

Accounts receivable, net of allowances of $2,638 and $2,149, respectively

36,877

38,895

Investments

35,057

36,120

Deferred taxes

7,782

12,711

Prepaid expenses

7,394

4,238

Other current assets

4,072

4,567

Total current assets

122,258

143,225

Fixed assets, net

10,856

7,635

Capitalized software, net

27,007

30,287

Goodwill

215,478

215,478

Other intangibles, net

112,305

132,233

Other assets

1,389

1,483

Total assets

$

489,293

$

530,341

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

3,322

$

4,934

Accrued expenses and other current liabilities

21,023

19,846

Deferred revenue

40,719

40,309

Total current liabilities

65,064

65,089

Long term debt

75,482

91,164

Deferred taxes

22,918

39,384

Other long term liabilities

4,630

2,874

Total liabilities

168,094

198,511

Commitments and contingencies (Note 14)

Stockholders' equity:

Undesignated Preferred Stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2012 and December 31, 2011

Common Stock, $0.001 par value; 300,000,000 shares authorized; 55,132,070 and 54,248,178 shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively

55

54

Additional paid-in capital

417,207

411,781

Accumulated deficit

(95,928)

(80,056)

Accumulated other comprehensive (loss) income

(135)

51

Total stockholders' equity

321,199

331,830

Total liabilities and stockholders' equity

$

489,293

$

530,341

 

 

IntraLinks Holdings, Inc. Consolidated Statements of Operations (In Thousands, Except Share and per Share Data) (unaudited)

 

Three Months

Ended

September 30,

Three Months

Ended

September 30,

Nine Months

Ended

September 30,

Nine Months

Ended

September 30,

2012

2011

2012

2011

Revenue

$

54,753

$

54,319

$

159,303

$

159,955

Other Revenue

507

614

Total Revenue

54,753

54,826

159,303

160,569

Cost of revenue

15,209

14,439

46,935

42,192

Gross profit

39,544

40,387

112,368

118,377

Operating expenses:

Product development

5,359

3,587

15,073

14,692

Sales and marketing

23,526

23,734

70,659

67,461

General and administrative

12,453

10,292

38,812

29,735

Impairment of capitalized software

8,377

Total operating expenses

41,338

37,613

132,921

111,888

(Loss) income from operations

(1,794)

2,774

(20,553)

6,489

Interest expense

1,171

2,552

5,245

8,146

Amortization of debt issuance costs

177

214

591

1,155

Other (income) expense, net

(689)

515

(1,478)

(2,547)

Net (loss) before income tax

(2,453)

(507)

(24,911)

(265)

Income tax (benefit)

(1,194)

(1,271)

(9,039)

(1,519)

Net (loss) income

$

(1,259)

$

764

$

(15,872)

$

1,254

Net (loss) income per common share

Basic

$

(0.02)

$

0.01

$

(0.29)

$

0.02

Diluted

$

(0.02)

$

0.01

$

(0.29)

$

0.02

Weighted average number of shares

used in calculating net (loss) income

per share

Basic

54,391,089

53,912,637

54,291,683

53,140,869

Diluted

54,391,089

54,645,578

54,291,683

54,396,333

 

IntraLinks Holdings, Inc. Consolidated Statements of Cash Flows (In Thousands) (unaudited)

 

Nine Months Ended

September 30,

Nine Months Ended

September 30,

2012

2011

Net (loss) income

$

(15,872)

$

1,254

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

Depreciation and amortization

13,502

15,401

Stock-based compensation expense

4,831

6,765

Amortization of intangible assets

19,928

21,472

Amortization of deferred costs

1,335

1,155

Provision for bad debts and customer credits

1,443

642

Loss (gain) on disposal of fixed assets

16

227

Impairment of capitalized software

8,377

Change in deferred taxes

(11,537)

(1,518)

Gain on interest rate swap

(1,455)

(3,098)

Currency remeasurement loss (gain)

465

357

Changes in operating assets and liabilities:

Accounts receivable

330

(5,826)

Prepaid expenses and other current assets

(2,682)

(2,894)

Other assets

(680)

813

Accounts payable

(1,612)

(1,274)

Accrued expenses and other liabilities

4,307

(1,962)

Deferred revenue

486

3,601

Net cash provided by operating activities

21,182

35,115

Cash flows from investing activities:

Capital expenditures

(5,462)

(4,519)

Leasehold improvements reimbursed by landlord

(1,420)

Capitalized software development costs

(14,676)

(14,414)

Purchase of short-term investments

(31,346)

(20,459)

Maturity of short-term investments

31,820

Net cash used in investing activities

(21,084)

(39,392)

Cash flows from financing activities:

Proceeds from exercise of stock options

29

1,347

Proceeds from issuance of common stock

447

1,091

Offering costs paid in connection with initial public

offering and follow-on offerings

(516)

Proceeds from follow-on offering, net of underwriting

discounts and commissions

35,003

Repayments of outstanding financing arrangements

(300)

Repayments of outstanding principal on long-term debt

(15,656)

(35,412)

Net cash (used in) provided by financing activities

(15,480)

1,513

Effect of foreign exchange rate changes on cash and cash equivalents

(236)

(56)

Net (decrease) increase in cash and cash equivalents

(15,618)

(2,820)

Cash and cash equivalents at beginning of period

46,694

50,467

Cash and cash equivalents at end of period

$

31,076

$

47,647

 

 

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

 

Three Months Ended September 30,

Nine Months Ended September 30,

2012

2011

2012

2011

Gross profit

$

39,544

$

40,387

$

112,368

$

118,377

Gross margin

72.2

%

73.7

%

70.5

%

73.7

%

Cost of revenue – stock-based compensation expense

121

110

321

218

Cost of revenue – amortization of intangible assets

1,986

3,309

8,383

9,927

Non-GAAP Gross profit

$

41,651

$

43,806

$

121,072

$

128,522

Non-GAAP Gross margin

76.1

%

79.9

%

76.0

%

80.0

%

(Loss ) Income from operations

$

(1,794)

$

2,774

$

(20,553)

$

6,489

Stock-based compensation expense

1,795

2,894

4,831

6,765

Amortization of intangible assets

5,834

7,157

19,928

21,472

Impairment on capitalized software

8,377

Costs related to public stock offerings

57

Non-GAAP adjusted Operating income

$

5,835

$

12,825

$

12,583

$

34,783

Net (loss ) income before income tax

$

(2,453)

$

(507)

$

(24,911)

$

(265)

Stock-based compensation expense

1,795

2,894

4,831

6,765

Amortization of intangible assets

5,834

7,157

19,928

21,472

Impairment on capitalized software

8,377

Costs related to public stock offerings

57

Costs related to debt repayments

47

Non-GAAP adjusted Net Income before tax

5,176

9,544

8,272

28,029

Non-GAAP Income tax provision

1,967

3,560

3,143

10,231

Non-GAAP adjusted Net income

$

3,209

$

5,984

$

5,129

$

17,798

Net (loss ) income

$

(1,259)

$

764

$

(15,872)

$

1,254

Interest expense

1,171

2,552

5,245

8,146

Income tax benefit

(1,194)

(1,271)

(9,039)

(1,519)

Depreciation and amortization

4,732

5,197

13,502

15,401

Amortization of intangible assets

5,834

7,157

19,928

21,472

Stock-based compensation expense

1,795

2,894

4,831

6,765

Impairment on capitalized software

8,377

Amortization of debt issuance costs

177

214

591

1,155

Other expense (income), net

(689)

515

(1,478)

(2,547)

Costs related to public stock offerings

57

Non-GAAP adjusted EBITDA

$

10,567

$

18,022

$

26,085

$

50,184

Non-GAAP adjusted EBITDA margin

19.3

%

32.9

%

16.4

%

31.3

%

Cash flow provided by operations

2,457

13,643

21,182

35,115

Capital expenditures

(5,287)

(6,927)

(21,558)

(18,933)

Free cash flow

$

(2,830)

$

6,716

$

(376)

$

16,182

 

 

IntraLinks Holdings, Inc. Reconciliation of Non-GAAP to GAAP Financial Measures - Guidance (In Thousands) (unaudited)

 

Three Months Ending

December 31,

2012

Year Ending

December 31,

2012

Gross profit

$

36,383

$

148,751

Gross margin

70.6

%

70.6

%

Cost of revenue - stock-based compensation expense

121

442

Cost of revenue - amortization of intangible assets

1,986

10,368

Non-GAAP gross profit

$

38,490

$

159,561

Non-GAAP gross margin

74.7

%

75.7

%

Loss from operations

(3,900)

(24,456)

Stock-based compensation expense

2,066

6,898

Amortization of intangible assets

5,834

25,762

Impairment of capitalized software

8,377

Non-GAAP adjusted operating income

$

4,000

$

16,581

Net loss before income tax

$

(5,186)

$

(30,097)

Stock-based compensation expense

2,066

6,898

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

2,714

10,987

Non-GAAP income tax provision

1,031

4,175

Non-GAAP adjusted net income

$

1,683

$

6,812

Net loss

$

(4,470)

$

(20,342)

Interest expense

1,181

6,425

Income tax benefit

(716)

(9,755)

Depreciation and amortization

4,500

18,002

Amortization of intangible assets

5,834

25,762

Stock-based compensation expense

2,066

6,898

Amortization of debt issuance costs

149

740

Other income, net

(44)

(1,524)

Impairment of capitalized software

8,377

Non-GAAP adjusted EBITDA

$

8,500

$

34,583

Non-GAAP adjusted EBITDA margin

16.5

%

16.4

%

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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