First Quarter Results Ended March 31, 2016
Forward Looking Statements Disclaimer This presentation contains statements, including statements about future plans and expectations, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements are generally stated in terms of the Company’s plans, expectations and intentions. These statements are based on the current beliefs, expectations and assumptions of the Company’s management and the current economic environment. Forward looking statements are inherently subject to significant economic, competitive and other uncertainties and contingencies, many of which are beyond the control of management. The Company cautions that these statements are not guarantees of future performance. There are or will be important known and unknown factors and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward looking statements. These factors, include, but are not limited to, risks associated with the global economic environment on the Company’s customer base (particularly financial services firms) potentially impacting our business and financial condition; competition; changes in technology and market requirements; decline in demand for the Company's products; inability to timely develop and introduce new technologies, products and applications; difficulties or delays in absorbing and integrating acquired operations, products, technologies and personnel; loss of market share; an inability to maintain certain marketing and distribution arrangements; and the effect of newly enacted or modified laws, regulation or standards on the Company and its products; and other factors and uncertainties discussed in our filings with the U.S. Securities and Exchange Commission (the “SEC”) . You are encouraged to carefully review the section entitled “Risk Factors” in our latest Annual Report on Form 20-F and in our other relevant filings with the SEC for additional information regarding these and other factors and uncertainties that could affect our future performance, and undue reliance should not be placed upon these statements . The forward-looking statements contained in this presentation are made as of the date hereof, and the Company undertakes no obligation to update or revise them, except as required by law.
Explanation of Non-GAAP measures Non-GAAP financial measures consist of GAAP financial measures adjusted to exclude: amortization of acquired intangible assets, re-organization expenses, restructures expenses, share-based compensation, certain business combination accounting entries, settlement and related expenses and tax adjustment re non-GAAP adjustments. The purpose of such adjustments is to give an indication of our performance exclusive of non-cash charges and other items that are considered by management to be outside of our core operating results. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures, and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. These non-GAAP measures are among the primary factors management uses in planning for and forecasting future periods. Business combination accounting rules requires us to recognize a legal performance obligation related to a revenue arrangement of an acquired entity. The amount assigned to that liability should be based on its fair value at the date of acquisition. The non- GAAP adjustment is intended to reflect the full amount of such revenue. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business. We believe these non-GAAP financial measures provide consistent and comparable measures to help investors understand our current and future operating cash flow performance. These non-GAAP financial measures may differ materially from the non-GAAP financial measures used by other companies. Reconciliation between results on a GAAP and non-GAAP basis is provided in a table immediately following the Consolidated Statements of Income.
Q1 2016 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Q1 2016 Highlights* Gross margin Operating increased to margin of Operating Revenue of 70.6%; 25.6%; profit $226M; 4.3% compared to increase of increased to growth 2.3pp from 69.8% last $58M; growth year 23.3% last of 15% year Record EPS of $0.81, operating cash Company Nexidia increase of flow of $113M; increased acquisition 17%; above compared to closed; FY16 EPS guidance $104M last Guidance; at the end of range year to $3.41-$3.55 March 2016 * All numbers are Non-GAAP * All Q1 2015 comparable numbers exclude Intelligence and Physical Security divisions 5
Q1 2016 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
Good Growth and Execution Continued growth reflects good execution • Q1 REVENUES (Non-GAAP, $M ) • Emphasis on innovation and potfolio 226 expansion leads to increase in number of 7- digit deals 4.3% 217 Q1 15 Q1 16 Q1 EARININGS PER SHARE (Non-GAAP, $ ) • EPS came above guidance • Strong growth in EPS due to improved gross 0,81 and operating margins 17.4% • Continued successful execution of operational 0,69 plan * All Q1 2015 comparable numbers exclude Intelligence and Physical Security Q1 15 Q1 16 divisions
GAAP and Non-GAAP Income Statement $M (except EPS) Q1 2016 Q1 2015 GAAP revenue 226.0 216.6 Valuation adjustment on acquired deferred product revenue 0.08 - Valuation adjustment on acquired deferred service revenue 0.06 0.1 Non-GAAP revenues 226.1 216.7 GAAP Cost of revenue 74.5 73.1 Amortization of acquired intangible assets on cost of product (6.3) (6.8) Cost of product revenue adjustment (0.1) (0.1) Cost of services revenue adjustment (1.6) (0.8) Non-GAAP cost of revenue 66.5 65.4 GAAP gross profit 151.5 143.4 Gross profit adjustments 8.2 7.9 Non-GAAP gross profit 159.7 151.3 GAAP operating expenses 114.0 110.2 Research and development (2.0) (0.5) Sales and marketing (3.4) (2.6) General and administrative (4.3) (2.8) Amortization of acquired intangible assets (2.5) (3.5) Non-GAAP operating expenses 101.8 100.8 * Errors due to rounding 8
GAAP and Non-GAAP Income Statement (cont.) $M (except EPS) Q1 2016 Q1 2015 GAAP taxes on income 6.0 6.6 Tax adjustment re non-GAAP adjustments 6.0 3.5 Non-GAAP taxes on income 12.0 10.1 GAAP net income (loss) from continuing operations 35.3 28.6 Valuation adjustment on acquired deferred revenue 0.1 0.1 Amortization of acquired intangible assets 8.8 10.3 Share-based compensation 6.4 6.8 Re-organization expenses 1.3 - Acquisition related expenses 3.7 - Tax adjustments re non-GAAP adjustments (6.0) (3.5) Non-GAAP net income from continuing operations 49.6 42.3 GAAP diluted earnings (loss) per share from continuing operations 0.58 0.47 Non-GAAP diluted earnings per share from continuing operations 0.81 0.69 * Errors due to rounding 9
Revenue Breakdown by Region (Non-GAAP) Q1 2016 20% 68% EMEA $45M, +12% YoY AMERICAS $155M, +0% YoY 12% APAC $26M, +19% YoY * All Q1 2015 comparable numbers exclude Intelligence and Physical Security divisions
Revenue Breakdown by Business Unit (Non-GAAP) Q1 2016 24% FINANCIAL CRIME & COMPLIANCE $54M, +8% YoY 76% CUSTOMER INTERACTIONS $172M, +3% YoY * All Q1 2015 comparable numbers exclude Intelligence and Physical Security divisions
Gross Margin Q1 2016 (Non-GAAP) Gross Margin Product Margin Services Margin 70.6%| +80bp 88.8%| +180bp 63.3%| +220bp Product Product GM GM 88.8% 87.0% Gross Service Gross Margin Gross Margin 70,6% Service Margin 69,8% Gross 63,3% Margin 61,1% Q1 15 Q1 16 Q1 15 Q1 16 Q1 15 Q1 16 Gross margin expansion is the result of favorable product mix and more effective utilization of the services organization * All Q1 2015 comparable numbers exclude Intelligence and Physical Security divisions
Continued Operating Margin Improvement (Non-GAAP) Operating Margin Operating 25,6% Margin 23,3% Q1 15 Q1 16 • Continued expansion of operating margin Improvement is a result of an increase in gross margin and continued cost discipline • * All Q1 2015 comparable numbers exclude Intelligence and Physical Security divisions
Cost Ratio – Increased Operating Efficiency Q1 2016 (Non-GAAP) G&A S&M R&D As % of revenue As % of revenue As % of revenue S&M 24,4% R&D R&D S&M 13,7% 13,5% 23,2% G&A 8,5% G&A 8,3% Q1 15 Q1 16 Q1 15 Q1 16 Q1 15 Q1 16 * All Q1 2015 comparable numbers exclude Intelligence and Physical Security divisions
Analytic Applications As % of bookings 70% Series 1 58% 60% 54% 50% 47% 45% 44% 40% 38% 30% Q1 11 Q1 12 Q1 13 Q1 14 Q1 15 Q1 16 • Analytics applications continue to be a growth driver • Analytics are steadily growing and reached 58% of new bookings in Q1 2016 * All numbers exclude Physical Security division
Q1 2016 Highlights Income Statement Balance Sheet and Cash Flow Analysis Outlook
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