Attunity Reports Record Third Quarter 2018 Results; 50% License Growth

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Nov 01,2018
Attunity Reports Record Third Quarter 2018 Results; 50% License Growth
Record Operating Income of $3.5 million
Increases Outlook for Full Year 2018

BURLINGTON, Massachusetts, Nov.1, 2018 /PRNewswire/ --

Attunity Ltd. (NasdaqCM: ATTU), a leading provider of data integration and big data management software solutions, today reported its unaudited financial results for the three-month period ended September 30, 2018.

"The third quarter of 2018 was another great quarter for Attunity. We are pleased to report strong performance including license revenue growth of 50% year-over-year and total revenue growth of 35% year-over-year, as well as increased profits and cash flow from operations," stated Shimon Alon, Chairman and CEO of Attunity.

"Our record performance comes from a healthy mix of new customer deals, existing customer expansion, growth across all territories, our expanded product suite and contribution from new and existing partners. With positive momentum across our entire business and three strong quarters behind us this year, we determined to raise our guidance for the full year," concluded Mr. Alon.

Recent Operational Highlights

  • Number of term-based license deals grew by 40% sequentially, with over 60% of the number of Replicate direct license deals being term-based
  • Closed $1.0 million deal with existing multi-million dollar customer in the manufacturing industry, expanding their initial deployment by adding more sources, more capacity, and licensing more products
  • Closed $1.0 million term-based deal with new customer in the education sector
  • Expanded Attunity Data Integration platform to include comprehensive support for Google Cloud Platform
  • Achieved SAP-certified integration with SAP HANA® for Attunity Replicate

Financial Highlights for the Third Quarter of 2018 compared with the Third Quarter of 2017

  • Total revenue was $22.2 million, compared with $16.5 million*
  • Operating profit was $3.5 million, compared with $0.1 million*
  • Non-GAAP operating profit was $4.8 million, compared with $1.5 million**
  • Net income was $3.1 million, compared with a net loss of $0.4 million*
  • Non-GAAP net income was $4.5 million, compared with non-GAAP net income of $0.8 million**
  • Cash flow from operations was $2.5 million, compared with cash used in operations of $2.8 million

Financial Results for Third Quarter of 2018

Total revenue for the third quarter of 2018 increased 35% to $22.2 million, compared with $16.5 million for the same period in 2017. This includes license revenue of $13.8 million, which grew 50% compared with $9.2 million for the same period in 2017, and maintenance and service revenue, which grew 16% to $8.4 million, compared with $7.3 million for the same period in 2017. License revenue includes approximately $2.7 million, recognized from a previously announced strategic OEM licensing agreement with a top information technology company.*

Operating expenses for the third quarter of 2018 increased 14% to $18.7 million, compared with $16.4 million for the same period in 2017.*

Non-GAAP operating expenses for the third quarter of 2018 increased 16% to $17.4 million, compared with $15.0 million for the same period in 2017. Non-GAAP operating expenses exclude approximately $1.3 million in equity-based compensation expenses and amortization associated with acquisitions, similar to the same period in 2017.**

Operating profit for the third quarter of 2018 was $3.5 million, compared with $0.1 million for the same period in 2017.*

Non-GAAP operating profit was $4.8 million for the third quarter of 2018, compared with $1.5 million for the same period in 2017. Non-GAAP operating profit excludes approximately $1.3 million in equity-based compensation expenses and amortization associated with acquisitions, similar to the same period in 2017.**

Net income for the third quarter of 2018 was $3.1 million, or $0.14 per diluted share, compared with a net loss of $0.4 million, or ($0.03) per diluted share, in the same period in 2017.*

Non-GAAP net income for the third quarter of 2018 was $4.5 million, or $0.20 per diluted share, compared with $0.8 million, or $0.04 per diluted share, for the same period in 2017. Non-GAAP net income excludes approximately $1.4 million primarily in equity-based compensation expenses and amortization associated with acquisitions, compared with approximately $1.2 million of similar expenses for the same period in 2017.**

Cash flow from operations in the third quarter of 2018 was $2.5 million, compared with cash used in operations of $2.8 million in the same period in 2017.

Cash and cash equivalents and short-term deposits were $38.1 million as of September 30, 2018, compared with $33.1 million as of June 30, 2018.

Updated Outlook for Full Year 2018

The Company increased its outlook for the full year 2018 as follows:

  • Total revenue is estimated to grow to between $83 and $85 million, compared with prior (updated) guidance of $78 to $81 million.
  • Non-GAAP operating margin is estimated to be between 13% and 15%, compared with prior (updated) guidance of 7% to 10%.

Financial Reconciliation to non-GAAP figures for the updated 2018 outlook:


From

To

GAAP Operating Profit Margin

7%

9%

Equity-based compensation

(5%)

(5%)

Amortization associated with acquisitions

(1%)

(1%)

Non-GAAP Operating Profit Margin (1)

13%

15%

(1) Non-GAAP Operating Profit Margin is calculated by dividing the non-GAAP Operating Profit by the total non-GAAP revenues for the period.

These estimates for 2018 reflect the Company's current and preliminary views, which are subject to change (see below under "Safe Harbor Statement") and are based on various assumptions, including the continued expanded adoption of the Cloud as a leading data platform, the continued adoption of modern analytics and the improved execution capabilities of our expanded sales team.

** See "Use of Non-GAAP Financial Information" below for more information regarding Attunity's use of Non-GAAP financial measures.

Conference Call and Webcast Information

The Company will host a conference call with the investment community on Thursday, November 1st at 8:30 a.m. Eastern Time featuring remarks by Shimon Alon, Chairman and CEO,

Dror Harel-Elkayam, CFO, and Itamar Ankorion, CMO of Attunity. The dial-in numbers for the conference call are +1-877-407-9039 (U.S. Toll Free), +1-809-406-247 (Israel), or +1-201-689-8470 (International). All dial-in participants must use the following code to access the call: 13683765.

Please call at least five minutes before the scheduled start time. The conference call will also be available via webcast, which can be accessed through the Investor Relations section of Attunity's website, ir.attunity.com. Please allow extra time prior to the call to visit the site and download any necessary software to listen to the live broadcast.

For interested individuals unable to join the conference call, a replay of the call will be available through November 15, 2018, at +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671 (International). Participants must use the following code to access the replay of the call: 13683765. The online archive of the webcast will be available on ir.attunity.com/events-and-presentations for 30 days following the call.

About Attunity

Attunity is a leading provider of data integration and big data management software solutions that enable availability, delivery and management of data across heterogeneous enterprise platforms, organizations and the cloud. Our software solutions include data replication and distribution, test data management, change data capture (CDC), data connectivity, enterprise file replication (EFR), managed file transfer (MFT), data warehouse automation, data usage analytics and cloud data delivery.

Attunity has supplied innovative software solutions to its enterprise-class customers for over 20 years and has successful deployments at thousands of organizations worldwide. Attunity provides software directly and indirectly through a number of partners such as Microsoft, Oracle, IBM and Hewlett Packard Enterprise. Headquartered in Boston, Attunity serves its customers via offices in North America, Europe, and Asia Pacific and through a network of local partners. For more information, visit www.attunity.com or our blog and join our community on Twitter, Facebook, LinkedIn and YouTube.

(*) New Revenue Accounting Standard

Effective January 1, 2018, Attunity adopted the FASB-issued ASU, No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", or ASC 606, a new accounting standard related to revenue recognition. Attunity adopted ASC 606 using the modified retrospective method, which means that the comparative financial information for the three and nine month periods ended September 30, 2017 has not been restated in the current financial statements under the new accounting standard. Accordingly, the percentage changes from the 2017 to 2018 periods differ from what they would have been had the same accounting standards been in effect for both periods. In the interest of comparability during the transition year to ASC 606, the company has provided revenue, operating expenses, operating income (loss), financial income, taxes on income, net income (loss) and earnings per share information in accordance with both ASC 606 and revenue recognition rules in effect prior to the adoption of ASC 606 (ASC No. 985-605, or ASC 605). For further details, see the Impact of the Adoption of ASC 606 table later in this press release and the note thereto. 

(**) Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles, or GAAP, Attunity uses Non-GAAP measures of net income (loss), operating expenses, operating profit (loss), and diluted net income (loss) per share, which are adjusted from results based on GAAP to exclude amortization associated with acquisitions, equity-based compensation expenses, non-cash financial expenses, such as the effect of a revaluation of liabilities presented at fair value, and the effect of changes in deferred taxes related to non-GAAP adjustments. Attunity's management believes the non-GAAP financial information provided in this release is useful to investors' understanding and assessment of Attunity's on-going core operations and prospects for the future. Management uses both GAAP and non-GAAP information in evaluating and operating its business internally and as such has determined that it is important to provide this information to investors. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. For further details, see the Reconciliation of Supplemental Non-GAAP Financial Information table later in this press release.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Statements preceded by, followed by, or that otherwise include the words "believes", "expects", "anticipates", "intends", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. For example, when we discuss the momentum across our entire business, the continued trend of demand for our recurring revenue pricing model and our updated outlook for 2018, we are using forward-looking statements. In addition, announced results for the third quarter of 2018 are preliminary, unaudited and subject to year-end audit adjustment. Because such statements deal with future events, they are subject to various risks and uncertainties and actual results, expressed or implied by such forward-looking statements, could differ materially from Attunity's current expectations. Factors that could cause or contribute to such differences include, but are not limited to, risks and uncertainties relating to: our history of operating losses and ability to sustain profitability; our business and operating results dependency on the successful and timely implementation of our third party partner solutions; the lengthy sales cycle of our products; competition; acquisitions, including costs and difficulties related to integration of acquired businesses and impairment charges; global economic conditions; timely availability and customer acceptance of Attunity's new and existing products; risks relating to proprietary rights and risks of infringement; the potential loss of one or more of our significant customers or a decline in demand from one or more of these customers; our ability to retain and attract qualified personnel;  and other factors and risks on which Attunity may have little or no control. This list is intended to identify only certain of the principal factors that could cause actual results to differ. For a more detailed description of the risks and uncertainties affecting Attunity, reference is made to Attunity's latest Annual Report on Form 20-F which is on file with the Securities and Exchange Commission (SEC) and the other risk factors discussed from time to time by Attunity in reports filed with, or furnished to, the SEC. Except as otherwise required by law, Attunity undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

The contents of any website or hyperlinks mentioned in this press release are for informational purposes and the contents thereof are not part of this press release.

©Attunity 2018. All Rights Reserved. Attunity is a registered trademark of Attunity Inc. All other product and company names herein may be trademarks of their respective owners.

For more information, please contact::

Investor Contact::
Todd Fromer / Allison Soss
KCSA Strategic Communications
Tel. +1-212-896-1267
Attunity@kcsa.com

Company Contact::
Dror Harel-Elkayam, CFO
Attunity Ltd.
Tel. +972-9-899-3000
Dror.elkayam@attunity.com

 

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

 



 September
30,


December
31,




2018


2017




Unaudited


Audited


ASSETS












CURRENT ASSETS:






Cash and cash equivalents

$

14,329

$

29,087


Short term deposits


23,768


-


Trade receivables (net of allowance for doubtful accounts of $15
at September 30, 2018 and December 31, 2017)


14,347


10,609


Deferred commissions costs


1,354


-


Other accounts receivable and prepaid expenses


2,415


1,074


Total current assets


56,213


40,770








LONG-TERM ASSETS:






Other assets


183


1,361


Deferred commissions costs


5,080


-


Severance pay fund


4,618


4,378


Property and equipment, net


1,427


1,287


Goodwill and other intangible assets, net


31,653


32,360


Total long-term assets


42,961


39,386








Total assets

$

99,174

$

80,156



 

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands, except share and per share data

 



September
30,


 December
31,




2018


2017





Unaudited


Audited



LIABILITIES AND SHAREHOLDERS' EQUITY












CURRENT LIABILITIES:












Trade payables

$

871

$

666


Deferred revenues


13,045


11,066


Employees and payroll accruals


6,068


5,730


Accrued expenses and other current liabilities


1,785


3,066








Total current liabilities


21,769


20,528








LONG-TERM LIABILITIES:






Other liabilities


704


321


Deferred revenues


3,277


2,163


Accrued severance pay


6,157


5,941








Total long-term liabilities


10,138


8,425








SHAREHOLDERS' EQUITY:






Share capital – Ordinary shares of NIS 0.4 par value - Authorized:
32,500,000 shares at September 30, 2018 and December 31, 2017 ;
Issued and outstanding: 21,336,852 shares at September 30, 2018
and 20,718,468 shares at December 31, 2017


2,430


2,361


Additional paid-in capital


180,673


174,693


Accumulated other comprehensive loss


(1,377)


(1,222)


Accumulated deficit


(114,459)


(124,629)








Total shareholders' equity


67,267


51,203


Total liabilities and shareholders' equity

$

99,174

$

80,156


 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars and shares in thousands, except per share data

 



Three months ended


Nine months ended



September 30,  


September 30,



2018


2017


2018


2017



Unaudited


Unaudited

Revenues:









Software licenses

$

13,772

$

9,189

$

35,396

$

22,353

Maintenance and services 


8,448


7,290


24,872


21,470

Total revenues


22,220


16,479


60,268


43,823

Operating expenses:









Cost of revenues 


2,527


2,703


7,933


7,228

Research and development


4,091


3,674


12,022


10,473

Selling and marketing


10,437


8,527


30,514


25,182

General and administrative


1,636


1,464


4,601


3,965

Total operating expenses


18,691


16,368


55,070


46,848










Operating profit (loss)


3,529


111


5,198


(3,025)










Financial income (expenses), net


122


20


208


(37)










Income (loss) before taxes on
income


3,651


131


5,406


(3,062)










Taxes on income


(566)


(559)


(1,863)


(2,031)










Net profit (loss)

$

3,085

$

(428)

$

3,543

$

(5,093)










Basic net income (loss) per share

$

0.15

$

(0.03)

$

0.17

$

(0.30)

Weighted average number of
shares used in computing
basic net income (loss) per share


21,214


17,090


20,979


17,060

Diluted net income (loss) per share

$

0.14

$

(0.03)

$

0.16

$

(0.30)

Weighted average number of
shares used in computing
diluted net income (loss) per share


22,406


17,090


21,589


17,060

 

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

 



Nine months ended September 30,




2018


2017




Unaudited


Operating activities:






Net profit (loss)

$

3,543

$

(5,093)


Adjustments required to reconcile net profit (loss)
to net cash provided by (used in) operating activities:





Depreciation


405


363


Stock based compensation


3,039


2,654


Amortization of intangible assets


707


1,010


Accrued interest on short term deposits


(268)


-


Change in:






   Accrued severance pay, net


(24)


289


   Trade receivables


(1,526)


(1,472)


   Other accounts receivable and prepaid expenses


(1,379)


(596)


   Other long-term assets


43


394


   Trade payables


213


555


   Deferred revenues


3,809


783


   Employees and payroll accruals


329


(309)


   Accrued expenses and other liabilities


(528)


(15)


   Deferred commissions costs


(1,960)


-


Liabilities presented at fair value


-


(212)


Net cash provided by (used in) operating activities


6,403


(1,649)








Investing activities:






Short term deposits


(23,500)


-


Purchase of property and equipment


(547)


(409)


Net cash used in investing activities


(24,047)


(409)








Financing activities:






Proceeds from exercise of options


3,008


421


Payment of contingent consideration


-


(271)


Net cash provided by financing activities


3,008


150


Foreign currency translation adjustments on cash
and cash equivalents


(122)


35








Decrease in cash and cash equivalents


(14,758)


(1,873)


Cash and cash equivalents at the beginning of the
year


29,087


9,166








Cash and cash equivalents at the end of the period

$

14,329

$

7,293








Supplemental disclosure of cash flow activities:






Cash paid during the year for taxes

$

3,053

$

1,619


Supplemental disclosure of non-cash financing
activities:






Receivables on account of shares

$

240

$

-



 

 

 

RECONCILIATION OF SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION

U.S. dollars  in thousands, except per share data

 


Three months ended


Nine months ended


September 30,


September 30,


2018


2017


2018


2017


Unaudited


Unaudited









GAAP and Non-GAAP revenues

$    22,220


$   16,479


$   60,268


$    43,823

GAAP operating expenses

18,691


16,368


55,070


46,848

Cost of revenues (1)

(50)


(51)


(151)


(115)

Research and development (1)

(138)


(213)


(473)


(578)

Sales and marketing (1)

(637)


(497)


(1,734)


(1,279)

General and administrative (1)

(226)


(243)


(681)


(682)

Amortization of acquired intangible assets

(236)


(337)


(707)


(1,010)

Non-GAAP operating expenses

17,404


15,027


51,324


43,184









GAAP operating income (loss)

3,529


111


5,198


(3,025)

Operating adjustments

(1,287)


(1,341)


(3,746)


(3,664)

Non-GAAP operating income

4,816


1,452


8,944


639









GAAP financial income (expenses), net

122


20


208


(37)

Revaluation of liabilities presented at fair value

-


-


-


(212)

Non -GAAP financial  income (expenses), net

122


20


208


(249)









Taxes on income

(566)


(559)


(1,863)


(2,031)

Income taxes (tax benefits) related to non-GAAP
adjustments

156


(161)


402


22

Non-GAAP taxes on income

(410)


(720)


(1,461)


(2,009)









GAAP net income (loss)

3,085


(428)


3,543


(5,093)

Amortization of acquired intangible assets

236


337


707


1,010

Stock-based compensation (1)

1,051


1,004


3,039


2,654

Revaluation of liabilities presented at fair value

-


-


-


(212)

Income taxes (tax benefits) related to non-GAAP
adjustments

156


(161)


402


22

Non-GAAP net income (loss)

$    4,528


$     752


$    7,691


$   (1,619)









Non-GAAP basic net income (loss) per share

$      0.21


$    0.04


$      0.37


$     (0.09)

Non-GAAP diluted net income (loss) per share

$      0.20


$    0.04


$      0.35


$     (0.09)


 

(1) Stock-based compensation expenses:









Three months ended


Nine months ended


September 30,


September 30,


2018


2017


2018


2017

Cost of revenues

$          50


$         51


$      151


$     115

Research and development

138


213


473


578

Sales and marketing

637


497


1,734


1,279

General and administrative

226


243


681


682


$     1,051


$    1,004


$   3,039


$  2,654

 

 

 

IMPACT OF THE ADOPTION OF ASC 606

U.S. dollars in thousands, except per share data

 


Three months ended September 30, 2018

(Unaudited)


Nine months ended September 30, 2018

(Unaudited)


 

As reported
(ASC 606)

 

Adjustments

ASC 605
(excluding

impact of

ASC 606) *


As reported
(ASC 606)

Adjustments

ASC 605
(excluding

impact of

ASC 606) *

Revenues

$   22,220

$      (2,951)

$ 19,269


$     60,268

$      (9,765)

$         50,503

Operating expenses

18,691

706

19,397


55,070

1,960

57,030

Operating income
(loss)

3,529

(3,657)

(128)


5,198

(11,725)

(6,527)

Financial income

122

-

122


208

-

208

Taxes on income

(566)

96

(470)


(1,863)

296

(1,567)

Net income (loss)

$        3,085

$      (3,561)

$      (476)


$       3,543

$    (11,429)

$        (7,886)









Basic  net income
(loss) per share

$       0.15

$        (0.17)

$       (0.02)


$         0.17

$        (0.54)

$          (0.37)

Diluted net income
(loss) per share

$       0.14

$        (0.16)

$       (0.02)


$         0.16

$        (0.53)

$          (0.37)

(*) Effective January 1, 2018, the Company adopted the Financial Accounting Standard Board-issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", or ASC 606, a new accounting standard related to revenue recognition, using the modified retrospective method. In order to provide comparable figures during 2018, the transition year to ASC 606, the Company has provided the above summary of adjustments in financial information for the three and the nine months ended September 30, 2018 in accordance with both ASC 606 and previous accounting literature, ASC No. 985-605, or ASC 605. The table above also shows the adjustments made to reconcile the ASC 606 presentation to ASC 605. The ASC 605 information should be considered in addition to, not as a substitute for, nor superior to or in isolation from, the financial information prepared and reported in accordance with ASC 606.

 

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SOURCE Attunity Ltd.