IntraLinks Announces Third Quarter Financial Results
Revenue Grows 41% Year-over-year
NEW YORK, November 4, 2010 /PRNewswire-FirstCall/ -- IntraLinks Holdings, Inc. (NYSE: IL), a leading provider of critical information exchange solutions, today announced results for its third quarter ended September 30, 2010.
Financial highlights for the third quarter include:
- Total revenue of $47.9 million, up 41% year-over-year
- Enterprise revenue of $22.1 million, up 49% year-over-year
- M&A revenue of $18.2 million, up 58% year-over-year
- GAAP net loss narrows to $2.5 million, compared to $2.9 million in the
prior year
- Non-GAAP net income* increases 105% year-over-year to $3.8 million
- Non-GAAP adjusted EBITDA* of $16.4 million, a 34% non-GAAP adjusted
EBITDA margin*
- 2010 revenue and profitability guidance increased to reflect strong
momentum
"The very strong revenue growth for the quarter and year to date is reflective of the growing demand for our cloud-based critical information exchange platform," said Andrew Damico, president and CEO, IntraLinks. "The continued rapid growth of IntraLinks' Enterprise business and our leading position in Mergers and Acquisitions is proof that we deliver real innovation and value to our customers."
"The company's ongoing execution and the scalability of our business model led to third quarter revenue and profitability that were above our guidance," said Anthony Plesner, CFO, IntraLinks. "This performance also drove improved cash flow in the third quarter."
Third Quarter 2010 Summary:
Total third quarter revenue was $47.9 million, an increase of 41% on a year-over-year basis. Enterprise revenue was $22.1 million, up 49%; Mergers and Acquisitions (M&A) revenue was $18.2 million, up 58%; and Debt Capital Markets (DCM) revenue was $7.6 million, in line with the prior year.
Non-GAAP adjusted EBITDA* was $16.4 million, representing a non-GAAP adjusted EBITDA margin of 34% and an increase of 52% compared to $10.8 million in the year ago period.
GAAP net loss for the third quarter was $2.5 million, compared to a $2.9 million GAAP net loss in the same quarter a year ago. Basic and diluted GAAP net loss per share in the third quarter was $0.14, compared with a basic and diluted GAAP net loss per share of $1.73 in the same quarter a year ago.
The company generated non-GAAP net income of $3.8 million in the third quarter 2010, which includes an accounting charge of $4.1 million, after tax, related to the extinguishment of debt during the period and an income tax benefit of $3.3 million related to a state tax rate differential, which was accounted for as a discrete item in the period. Non-GAAP net income of $3.8 million in the third quarter of 2010 represents an increase of 105% over prior year non-GAAP net income of $1.8 million. Non-GAAP net income per share in the third quarter 2010 was $0.07 on a basis of 50.8 million shares outstanding, an increase compared to $0.04 per share on a basis of 49.5 million shares outstanding in the prior year's comparable quarter. The shares outstanding are on a diluted, pro forma basis, assuming that the initial public offering of shares, inclusive of the underwriters' overallotment, and the conversion of outstanding preferred stock to common stock occurred at the beginning of each respective period.
Deferred revenue on the balance sheet as of September 30, 2010 was $35.2 million, an increase of 42% on a year-over-year basis. Deferred revenue represents the billed but unearned portion of existing contracts for services to be provided. Deferred revenue does not include future potential revenue represented by the unbilled portion of existing commitments of our customers.
Business Outlook:
Based on information available as of November 4, 2010, IntraLinks is issuing guidance for the fourth quarter 2010, full year 2010 and full year 2011 as follows:
Fourth Quarter 2010
Revenue: $48 million to $50 million
Gross margin:
GAAP: 74% to 75%
Non-GAAP*: 81% to 82%
Operating margin:
GAAP: 8% to 10%
Non-GAAP*: 25% to 27%
Non-GAAP adjusted EBITDA*: $17 million to $19 million.
Full Year 2010
Revenue: $180 million to $182 million
Gross margin:
GAAP: 73% to 74%
Non-GAAP*: 81% to 82%
Operating margin:
GAAP: 4% to 6%
Non-GAAP*: 23% to 24%
Non-GAAP adjusted EBITDA*: $ 58 million to $60 million
Full Year 2011
Revenue: $210 million to $220 million
Gross margin:
GAAP: 75% to 76%
Non-GAAP*: 81% to 82%
Operating margin:
GAAP: 7% to 9%
Non-GAAP*: 24% to 26%
Non-GAAP adjusted EBITDA*: $69 million to $75 million
Quarterly Conference Call
IntraLinks will host a conference call today at 9:00 a.m. Eastern Time (ET) to discuss the company's third quarter financial results and its business outlook for the fourth quarter and full year 2010, and provide initial guidance for 2011, which may include guidance supplemental to the above. To access this call, dial 866-440-1940 (domestic) or 706-758-9574 (international). A passcode is not required. This presentation will also be webcast live on the investor relations section on the IntraLinks website at http://www.intralinks.com/ir.
Following the conference call, a replay will be available until November 11, 2010, at 800-642-1687 (domestic) or 706-645-9291 (international). The passcode for the replay is 19557697. An archived webcast of this conference call will also be available on the investor relations section on the IntraLinks website at http://www.intralinks.com/ir.
About IntraLinks
IntraLinks (NYSE: IL) is a leading global provider of Software-as-a-Service solutions for securely managing content, exchanging critical business information and collaborating within and among organizations. More than 1.3 million professionals in industries including financial services, pharmaceutical, biotechnology, consumer, energy, industrial, legal, insurance, real estate and technology, as well as government agencies, have utilized IntraLinks' easy-to-use, cloud-based solutions. IntraLinks users can accelerate information-intensive business processes and workflows, meet regulatory and risk management requirements and collaborate with customers, partners and counterparties in a secure, auditable and compliant manner. IntraLinks counts 800 of the Fortune 1000 as users. For more information, visit http://www.intralinks.com or http://blog.intralinks.com. You can also follow IntraLinks on Twitter at http://twitter.com/intralinks and Facebook at http://www.facebook.com/IntraLinks.
*Non-GAAP Financial Measures
This press release includes information about certain financial measures that are not prepared in accordance with GAAP, including non-GAAP gross margin, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income per share, non-GAAP adjusted EBITDA, and non-GAAP adjusted EBITDA margin. 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.
Non-GAAP gross margin, operating margin, net income and net income per share represent the corresponding GAAP measures adjusted for stock-based compensation expense and amortization of intangible assets. Non-GAAP net income per share is shown on a pro-forma basis, assuming the conversion of preferred shares and initial public offering occurred at the beginning of the respective periods. Adjusted EBITDA represents net income (loss) adjusted for (1) interest expense, net of interest income, (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) loss on extinguishment of debt and (8) other (income) expense. Items (1) through (8) are excluded from net income (loss) internally when evaluating our operating performance. Adjusted EBITDA margin represents adjusted EBITDA as a percentage of revenue.
Management believes that non-GAAP gross margin, non-GAAP operating margin, non-GAAP net income (loss), non-GAAP net income per share, non-GAAP adjusted EBITDA, and non-GAAP adjusted EBITDA margin, 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. Additionally, management believes that non-GAAP gross margin, non-GAAP operating margin, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA and adjusted EBITDA margin 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 operating margin, non-GAAP net income, non-GAAP net income per share, adjusted EBITDA, and adjusted EBITDA margin are not measures of financial performance under U.S. GAAP and, accordingly, should not be considered as alternatives to gross margin, operating margin, net loss or net loss per share 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. Further information on these and other factors that could affect the company's financial results is contained in our public filings with the Securities and Exchange Commission (SEC) from time to time, including our Registration Statement on Form S-1 (Registration No. 333-165991), which was declared effective by the Securities and Exchange Commission on August 5, 2010, and subsequent filings with the SEC. 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)
September 30, December 31,
2010 2009
ASSETS (unaudited)
Current Assets:
Cash and cash equivalents $ 31,296 $ 30,481
Restricted cash - 87
Accounts receivable, net of
allowances of $2,590 and
$2,470, respectively 36,812 25,898
Investments 960 3,414
Deferred taxes 6,979 6,979
Prepaid expenses and other
current assets 7,125 6,355
Total current assets 83,172 73,214
Fixed assets, net 9,404 7,064
Capitalized software, net 25,230 20,734
Goodwill 215,478 215,478
Other intangibles, net 168,021 189,604
Other assets 1,911 3,247
Total assets $ 503,216 $ 509,341
LIABILITIES, REDEEMABLE
CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable $ 5,646 $ 8,870
Accrued expenses and other
current liabilities 18,335 21,958
Deferred revenue 35,239 26,795
Total current liabilities 59,220 57,623
Long term debt 158,911 290,513
Deferred taxes 33,086 42,719
Other long term liabilities 3,300 4,040
Total liabilities 254,517 394,895
Commitments and contingencies
Redeemable convertible
preferred stock:
Series A $0.001 par value,
10,000,000 shares authorized;
0 and 35,864,887 shares
issued and outstanding
(liquidation preference of $0
and $176,604) as of September
30, 2010 and December 31,
2009, respectively - 176,478
Stockholders' equity
(deficit)
Common stock, $0.001 par
value; 300,000,000 shares
authorized; 50,256,662 and
3,152,669 shares issued and
outstanding as of September
30, 2010 and December 31,
2009, respectively 50 3
Additional paid-in capital 326,797 4,302
Accumulated deficit (78,314) (66,377)
Accumulated other
comprehensive income 166 40
Total stockholders' equity
(deficit) 248,699 (62,032)
Total liabilities, redeemable
convertible preferred stock
and stockholders' equity
(deficit) $ 503,216 $ 509,341
INTRALINKS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Share and per Share Data)
(unaudited)
Three Months Ended
September 30,
2010 2009
Revenue $ 47,874 $ 34,037
Cost of revenue 11,916 10,619
Gross profit 35,958 23,418
Operating expenses:
Product development 5,030 2,764
Sales and marketing 20,130 15,130
General and administrative 7,234 5,099
Restructuring costs - 45
Total operating expenses 32,394 23,038
Income (loss) from operations 3,564 380
Interest expense, net 5,862 7,405
Amortization of debt issuance costs 1,111 464
Loss on extinguishment of debt 4,974 -
Other (income) expense (919) 625
Net loss before income tax (7,464) (8,114)
Income tax benefit (4,951) (5,175)
Net loss (2,513) (2,939)
Net loss per common share - basic and diluted $ (0.14) $ (1.73)
Weighted average number of shares
used in calculating net loss per common
share - basic and diluted 18,056,423 1,699,094
(Continued)
Nine Months Ended
September 30,
2010 2009
Revenue $ 132,215 $ 101,523
Cost of revenue 34,947 37,468
Gross profit 97,268 64,055
Operating expenses:
Product development 13,774 8,780
Sales and marketing 58,256 43,073
General and administrative 20,376 14,640
Restructuring costs - 338
Total operating expenses 92,406 66,831
Income (loss) from operations 4,862 (2,776)
Interest expense, net 19,998 21,430
Amortization of debt issuance costs 2,026 1,414
Loss on extinguishment of debt 4,974 -
Other (income) expense (1,229) 10,326
Net loss before income tax (20,907) (35,946)
Income tax benefit (8,970) (15,807)
Net loss (11,937) (20,139)
Net loss per common share - basic and diluted $ (1.94) $ (13.10)
Weighted average number of shares
used in calculating net loss per common share -
basic and diluted 6,153,359 1,537,136
INTRALINKS HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(unaudited)
Nine Months Ended September 30,
2010 2009
Net loss $ (11,937) $ (20,139)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization 12,137 8,610
Stock-based compensation expense 2,846 1,246
Amortization of intangible assets 21,583 27,721
Amortization of debt discount 116 116
Amortization of debt issuance
cost 2,026 1,415
Provision for bad debts and
customer credits 332 479
Gain on disposal of fixed assets,
including insurance proceeds (221) (4)
Change in deferred taxes (9,634) (16,252)
(Gain) loss on interest rate swap (1,393) 9,666
Loss on extinguishment of debt 4,974 -
Non-cash interest expense 4,880 8,723
Changes in operating assets and
liabilities:
Restricted cash 87 451
Accounts receivable (11,219) (233)
Prepaid expenses and other
current assets 155 (330)
Other assets (2,391) 50
Accounts payable (3,231) (1,520)
Accrued expenses and other
liabilities (1,800) (3,020)
Deferred revenue 8,662 (266)
Net cash provided by operating
activities 15,972 16,713
Cash flows from investing
activities:
Capital expenditures (6,550) (3,745)
Capitalized software development
costs (12,470) (7,801)
Purchase of bank time deposits
with maturities greater than
three months (4,320) -
Sale of investments and maturity
of bank time deposits greater
than three months 6,810 25
Net cash used in investing
activities (16,530) (11,521)
Cash flows from financing
activities:
Proceeds from exercise of stock
options 240 1
Offering costs paid in connection
with initial public offering (1,767) -
Capital lease payments (27) (93)
Proceeds from initial public
offering 144,838 -
Repayments of long-term debt (137,778) (2,873)
Prepayment penalty on PIK loan (4,092)
Net cash provided by (used in)
financing activities 1,414 (2,965)
Effect of foreign exchange rate
changes on cash and cash
equivalents (41) (65)
Net increase in cash and cash
equivalents 815 2,162
Cash and cash equivalents at
beginning of period 30,481 24,671
Cash and cash equivalents at end
of period $ 31,296 $ 26,833
INTRALINKS HOLDINGS, INC.
RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES- HISTORICAL
(In Thousands)
(unaudited)
Three Months Ended September 30,
2010 2009
Reconciliation of Non-GAAP
adjusted EBITDA,
Non-GAAP adjusted EBITDA margin
and Free cash flow:
Net loss $ (2,513) $ (2,939)
Interest expense, net 5,862 7,405
Income tax benefit (4,951) (5,175)
Depreciation and amortization 4,531 2,725
Amortization of intangible assets 7,157 7,218
Stock-based compensation expense 1,102 429
Amortization of debt issuance 1,111 464
costs
Loss on extinguishment of debt 4,974 -
Other (income) expense (919) 625
Non-GAAP adjusted EBITDA $ 16,354 $ 10,752
Non-GAAP adjusted EBITDA margin 34.2% 31.6%
Capital expenditures $ 4,765 $ 4,470
Free cash flow $ 11,589 $ 6,282
Reconciliation of Non-GAAP gross
margin:
Gross profit $ 35,958 $ 23,418
Gross margin 75.1% 68.8%
Cost of revenue- stock-based
compensation expense 36 13
Cost of revenue- amortization of
intangible assets 3,309 3,309
Non-GAAP gross profit $ 39,303 $ 26,740
Non-GAAP gross margin 82.1% 78.6%
Reconciliation of Non-GAAP income
from operations:
Income (loss) from operations $ 3,564 $ 380
Stock-based compensation expense 1,102 429
Amortization of intangible assets 7,157 7,218
Non-GAAP income from operations $ 11,823 $ 8,027
Non-GAAP income from operations
as a percentage of total revenue 24.7% 23.6%
Income (loss) from operations as a
percentage of total revenue 7.4% 1.1%
Reconciliation of Non-GAAP net
income (loss):
Net loss $ (2,513) $ (2,939)
Stock-based compensation expense 1,102 429
Amortization of intangible assets 7,157 7,218
Income tax adjustment* (1,978) (2,873)
Non-GAAP net income (loss) $ 3,768 $ 1,835
(Continued)
Nine Months Ended September 30,
2010 2009
Reconciliation of Non-GAAP adjusted
EBITDA,
Non-GAAP adjusted EBITDA margin and
Free cash flow:
Net loss (11,937) $ (20,139)
Interest expense, net 19,998 21,430
Income tax benefit (8,970) (15,807)
Depreciation and amortization 12,137 8,612
Amortization of intangible assets 21,583 27,720
Stock-based compensation expense 2,846 1,246
Amortization of debt issuance costs 2,026 1,414
Loss on extinguishment of debt 4,974 -
Other (income) expense (1,229) 10,326
Non-GAAP adjusted EBITDA 41,428 $ 34,802
Non-GAAP adjusted EBITDA margin 31.3% 34.3%
Capital expenditures 19,020 11,546
Free cash flow 22,408 23,256
Reconciliation of Non-GAAP gross
margin:
Gross profit 97,268 64,055
Gross margin 73.6% 63.1%
Cost of revenue- stock-based
compensation expense 64 53
Cost of revenue- amortization of
intangible assets 9,927 15,994
Non-GAAP gross profit 107,259 80,102
Non-GAAP gross margin 81.1% 78.9%
Reconciliation of Non-GAAP income
from operations:
Income (loss) from operations 4,862 (2,776)
Stock-based compensation expense 2,846 1,246
Amortization of intangible assets 21,583 27,720
Non-GAAP income from operations 29,291 26,190
Non-GAAP income from operations
as a percentage of total revenue 22.2% 25.8%
Income (loss) from operations as a
percentage of total revenue 3.7% -2.7%
Reconciliation of Non-GAAP net
income (loss):
Net loss (11,937) (20,139)
Stock-based compensation expense 2,846 1,246
Amortization of intangible assets 21,583 27,720
Income tax adjustment* (7,373) (9,957)
Non-GAAP net income (loss) 5,119 (1,130)
*Income tax adjustment is used to adjust the GAAP income tax benefit to a non-GAAP income taxes provision (benefit).
INTRALINKS HOLDINGS, INC.
RECONCILIATION OF NON-GAAP TO GAAP FINANCIAL MEASURES- GUIDANCE
(In Thousands)
(unaudited)
Three Months Year Ending Year
Ending Ending
December 31, December 31, December
31,
2010 2010 2011
Reconciliation of Non-GAAP adjusted
EBITDA, Non-GAAP adjusted
EBITDA margin and Free cash flow:
Net income (loss) $ 690 $ (11,247) $ 389
Interest expense, net 4,231 24,229 14,300
Income tax provision (benefit) 547 (8,423) 6,788
Depreciation and amortization 4,757 16,894 18,000
Amortization of intangible assets 7,157 28,740 28,630
Stock-based compensation expense 1,019 3,865 5,691
Amortization of debt issuance costs 349 2,375 1,202
Loss on extinguishment of debt - 4,974 -
Other income (750) (1,979) (3,000)
Non-GAAP adjusted EBITDA $ 18,000 $ 59,428 $ 72,000
Non-GAAP adjusted EBITDA margin 36.7% 32.8% 33.5%
Capital expenditures $ 3,425 $ 22,445 $ 24,000
Free cash flow $ 14,575 $ 36,983 $ 48,000
Reconciliation of Non-GAAP gross
margin:
Gross profit $ 36,651 $ 133,919 $ 162,133
Gross margin 75% 74% 75%
Cost of revenue- stock-based
compensation expense 40 104 150
Cost of revenue- amortization
of intangible assets 3,309 13,236 13,237
Non-GAAP gross profit $ 40,000 $ 147,259 $ 175,520
Non-GAAP gross margin 81.6% 81.3% 81.6%
Reconciliation of Non-GAAP income
from operations:
Income from operations $ 4,574 $ 9,436 $ 19,529
Stock-based compensation expense 1,019 3,865 5,691
Amortization of intangible assets 7,157 28,740 28,630
Non-GAAP income from operations $ 12,750 $ 42,041 $ 53,850
Non-GAAP income from operations
as a percentage of total revenue 26.0% 23.2% 25.0%
Income from operations as a
percentage of total revenue 9.3% 5.2% 9.1%
Reconciliation of Non-GAAP
net income (loss):
Net income (loss) $ 690 $ (11,247) $ 389
Stock-based compensation expense 1,019 3,865 5,691
Amortization of intangible assets 7,157 28,740 28,630
Income tax adjustment* (4,147) (11,539) (10,410)
Non-GAAP net income $ 4,719 $ 9,819 $ 24,300
*Income tax adjustment is used to adjust the GAAP income tax benefit to a non-GAAP income tax provision (benefit).
Note: All forward-looking figures presented in this table are stated at the mid-point of the estimated range
David P. Roy
IntraLinks
Investor Relations
+1-212-342-7690
[email protected]
Radley Moss
IntraLinks
Public Relations
+1-212-543-7717
[email protected]
SOURCE IntraLinks Holdings, Inc.
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