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Advent Software (ADVS)

Q4 2010 Earnings Call

February 07, 2011 5:00 pm ET


Stephanie DiMarco - Founder, Chief Executive Officer and Director

David Hess - President

James Cox - Chief Financial Officer, Principal Accounting Officer and Senior Vice President

Heidi Flaherty - Vice President of Financial Planning and Investor Relations


David Scharf - JMP Securities LLC

Sterling Auty - JP Morgan Chase & Co

Tim Fox - Deutsche Bank AG

Jonathan Maietta - Needham & Company, LLC

Andrey Glukhov - Brean Murray, Carret & Co., LLC

Gil Luria - Wedbush Securities Inc.



Good day, ladies and gentlemen, and welcome to the Fourth Quarter Advent Software Earnings Conference Call. My name is Jeremy, and I'll be your operator for today. [Operator Instructions] I would now like to turn the conference over to Heidi Flaherty, Vice President of Finance and Investor Relations.

Heidi Flaherty

Thank you, Jeremy. Good afternoon, and thank you for joining us today for Advent's Fourth Quarter 2010 Earnings Call. Hosting our call today are Stephanie DiMarco, Advent’s Chief Executive Officer; Peter Hess, Advent's President; and Jim Cox, Advent’s Chief Financial Officer.

Most of you participating in this call are aware of the regulations regarding forward-looking statements. Accordingly, we would like to note that during the course of this conference call, we will make forward-looking statements regarding future events and the future performance of the company. We wish to caution you that such statements are just predictions that involve risks and uncertainties and that actual events or results could differ materially. We discuss a number of these risks in detail in the company’s SEC reports, including our quarterly reports on Form 10-Q and our annual report on Form 10-K, and any forward-looking statements must be considered in the context of such risks and uncertainties. The company disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.

As a reminder, we include non-GAAP financial measures in our disclosures. These non-GAAP financial results are not meant to be considered in isolation or as a substitute for results prepared on a GAAP basis. Please refer to the tables entitled Reconciliation of Selected Continuing Operations, GAAP Measures to Non-GAAP Measures in our earnings release, which is filed with the SEC on our Form 8-K and available on our website for a reconciliation of GAAP to non-GAAP financial measures.

I'll now turn the call over to Stephanie.

Stephanie DiMarco

Thanks, Heidi, and welcome, everyone. Thank you for joining us this afternoon. I'm pleased to report that Advent had a record-breaking fourth quarter, capping an excellent year for the company. We had record annual revenues, up 9% year-over-year. New bookings were also a record, up 25% year-over-year. Operating profitability was up 30% year-over-year, and operating cash flow was up 5%. The continued demand we're seeing for our products and services is coming from many new areas: new firm formation, new business lines created in existing firms, replacing legacy and competitor systems, new adoption of research management systems and growing our existing customer relationships. Supporting these demand drivers are the underlying trends we see in the industry: the growth in global wealth, investor focus on transparency and reliability, financial reform, operating efficiency and trends in outsourcing. Later in the call, I'll talk more about our accomplishments and highlights, but first, let me turn the call over to Jim who will provide further details on the numbers.

James Cox

Thanks, Stephanie. Our fourth quarter results capped off another successful year for the company. All of our operating metrics and profitability showed growth year-over-year. Starting with bookings. Annual contract value, or ACV, of new contracts signed during the fourth quarter was $10.5 million, up 5% year-over-year. For the full year, ACV was $31.8 million, which represents 25% growth over 2009. We're really quite pleased with our bookings performance, and especially with the diversity of our fourth quarter bookings, as they were spread throughout our product lines, market segments and geographies, and no deal in the quarter exceeded 5% of our bookings total.

While we discontinued quarterly disclosures of new Geneva and APX contract signings, we will provide them annually. In 2010, we signed 44 new Geneva contracts and 88 new locally installed APX contracts. The 25% increase in ACV bookings drove an increase in backlog as well, which we disclose annually. The backlog represents contractual bookings that we have not yet invoiced. As of December 31, 2010, backlog was $127 million, up 27% from the $100 million at the end of 2009, primarily from the more robust bookings environment we experienced in 2010.

Turning to renewals. Our renewal rate, which is based on cash collections, and therefore reported one quarter in arrears, was 91% in the third quarter, two points higher than the same period last year. Our second quarter 2010 renewals increased from the initially reported 91% as well to an updated 95%, as we received subsequent collections. When all the cash is collected for our third quarter renewals, we expect the initially disclosed 91% rate to increase by our typical two to four points. With a $127 million in backlog, our strong bookings and our improving renewal rates, we're encouraged by the momentum we see as we're entering 2011.

Now turning to the financials. Net revenue for the fourth quarter was a record $75.6 million, up 14% over the fourth quarter of 2009. For the full year, revenue was a record $283.5 million, representing 9% growth over 2009. Term license fees for the quarter increased 25% over the fourth quarter of 2009. Other recurring revenue increased primarily as a result of growth in our data services and OnDemand business throughout 2010.

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