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Intralinks Announces Third Quarter 2013 Results

NEW YORK, Nov. 7, 2013 /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 2013.

"We are very pleased to have achieved record revenue performance in the third quarter. We are making good progress against our strategic initiatives, delivering continued strong M&A revenue growth, progressing on repositioning our enterprise business and adding key product capabilities to our DCM platform," said Ron Hovsepian, Intralinks' president and CEO.

Third Quarter 2013

Total revenue was $59.1 million, compared to $54.8 million for the corresponding quarter last year.

  • M&A revenue was $28.7 million, compared to $23.9 million for the corresponding quarter last year.
  • Enterprise revenue was $23.2 million, compared to $23.8 million for the corresponding quarter last year.
  • DCM revenue was $7.2 million, compared to $7.0 million for the corresponding quarter last year.

GAAP (generally accepted accounting principles) gross margin was 73.1%, compared to 72.2% for the corresponding quarter last year. Non-GAAP gross margin was 76.9%, compared to 76.1% for the corresponding quarter last year.

GAAP operating loss was ($2.6) million, compared to ($1.8) million for the corresponding quarter last year. Non-GAAP adjusted operating income was $5.4 million, compared to $5.8 million for the corresponding quarter last year.

GAAP net loss was ($2.5) million, compared to ($1.3) million for the corresponding quarter last year. GAAP net loss per share for the third quarter was ($0.05) on the basis of 55.2 million shares outstanding. In the comparable period of the prior year, GAAP net loss per share was ($0.02) on the basis of 54.4 million shares outstanding.

Non-GAAP adjusted net income was $3.0 million, compared to $3.2 million for the corresponding quarter last year. Non-GAAP adjusted net income per share was $0.05 on the basis of 56.3 million shares outstanding. In the corresponding quarter for the prior year, non-GAAP adjusted net income per share was $0.06 on the basis of 54.9 million shares outstanding.

Non-GAAP adjusted EBITDA was $10.7 million, compared to $10.6 million for the corresponding quarter last year.

Cash, restricted cash and investments were $81.8 million at the end of the quarter, up from $75.3 million at the end of last year.

Business Outlook:

Based on information available as of November 7, 2013, Intralinks is providing guidance for the fourth quarter 2013 as follows:

Fourth Quarter 2013

Revenue: $57.0 million to $59.0 million
GAAP operating loss: ($3.8) million to ($4.8) million
Non-GAAP adjusted operating income: $3.1 million to $4.1 million
Non-GAAP adjusted EBITDA: $8.5 million to $9.5 million
GAAP net loss per share: ($0.06) to ($0.07)
Non-GAAP net income per share: $0.02 to $0.03

Quarterly Conference Call

In conjunction with this announcement, Intralinks will host a conference call on Thursday, November 7, 2013, at 5:00 p.m. Eastern Time (ET) to discuss the company's financial results and its business outlook. To access this call, dial 877-300-8521 (domestic) or 412-317-6026 (international). A passcode is not required. The call will also be webcast live on the investor relations section of the Intralinks website at www.intralinks.com/ir. In conjunction with this call, there will also be slides with supplemental information available at that same website location.

Following the conference call, a replay will be available until November 14, 2013, at 877-870-5176 (domestic) or 858-384-5517 (international). The passcode for the replay is 10035203. 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. (NYSE: IL) is a leading, global technology provider of inter-enterprise content management and collaboration solutions. Through innovative Software-as-a-Service solutions, Intralinks solutions are designed to enable the secure and compliant exchange, control, and management of information between organizations when working through the firewall. More than 2.7 million professionals at 99% 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 $23.5 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

This 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 and non-GAAP adjusted EBITDA. 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 profit represents the corresponding GAAP measure adjusted to exclude (1) stock-based compensation expense and (2) amortization of intangible assets, if any.
  • 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, if any.
  • 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, if any. 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 fully diluted weighted average 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 (income) expense, net, (8) impairment charges or asset write-offs and (9) costs related to public stock offerings, if any.
  • Free cash flow represents net cash provided by operating activities less capital expenditures and capitalized software development costs.

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. In addition, free cash flow provides management with useful information for managing the cash needs of our business. Management also 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 expense related to intangible assets. However, non-GAAP gross profit, 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 substitutes for or superior to gross profit, operating income, net income (loss), and net cash provided by operating activities as indicators of operating performance.

Reconciliations of GAAP to Non-GAAP financial measures have been provided in the 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 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 from time to time, including our Annual Report on Form 10-K for the year-ended December 31, 2012 and subsequent quarterly 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, Inc. "Intralinks VIA" is a trademark of Intralinks, Inc. © 2013. All rights reserved.

 

Intralinks Holdings, Inc.

 

Consolidated Balance Sheets
(In Thousands, Except Share and per Share Data)
(unaudited)








September 30,
2013


December 31,
2012

ASSETS





Current assets:





Cash and cash equivalents


$

44,643



$

43,798


Accounts receivable, net of allowances of $3,370 and $2,927, respectively


37,868



37,667


Investments


34,721



31,549


Deferred taxes


10,484



7,469


Restricted cash


2,442




Prepaid expenses and other current assets


11,127



8,992


Total current assets


141,285



129,475


Fixed assets, net


12,293



10,645


Capitalized software, net


31,558



26,295


Goodwill


215,869



215,478


Other intangibles, net


89,514



106,750


Other assets


823



1,111


Total assets


$

491,342



$

489,754


LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





Accounts payable


$

8,021



$

4,451


Accrued expenses and other current liabilities


21,111



20,320


Deferred revenue


47,346



40,719


Current portion of long-term debt


75,328



1,030


Total current liabilities


151,806



66,520


Long-term debt


153



75,238


Deferred taxes


17,644



21,135


Other long-term liabilities


4,072



4,809


Total liabilities


173,675



167,702


Commitments and contingencies





Stockholders' equity:





Undesignated Preferred Stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding as of September 30, 2013 and December 31, 2012





Common Stock, $0.001 par value; 300,000,000 shares authorized; 55,933,403 and 55,486,651 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively


56



55


Additional paid-in capital


426,998



419,618


Accumulated deficit


(108,865)



(97,436)


Accumulated other comprehensive loss


(522)



(185)


Total stockholders' equity


317,667



322,052


Total liabilities and stockholders' equity


$

491,342



$

489,754



Intralinks Holdings, Inc.

 

Consolidated Statements of Operations

(In Thousands, Except Share and per Share Data)

(unaudited)








Three Months Ended September 30,


Nine Months Ended September 30,



2013


2012


2013


2012

Revenue


$

59,116



$

54,753



$

171,879



$

159,303


Cost of revenue


15,919



15,209



47,709



46,935


Gross profit


43,197



39,544



124,170



112,368


Operating expenses:









Product development


4,878



5,359



14,236



15,073


Sales and marketing


27,122



23,526



79,310



70,659


General and administrative


13,844



12,453



41,701



38,812


Impairment of capitalized software








8,377


Total operating expenses


45,844



41,338



135,247



132,921


Loss from operations


(2,647)



(1,794)



(11,077)



(20,553)


Interest expense


1,242



1,171



3,516



5,245


Amortization of debt issuance costs


71



177



287



591


Other (income) expense, net


(662)



(689)



306



(1,478)


Net loss before income tax


(3,298)



(2,453)



(15,186)



(24,911)


Income tax benefit


(782)



(1,194)



(3,757)



(9,039)


Net loss


$

(2,516)



$

(1,259)



$

(11,429)



$

(15,872)


Net loss per common share









Basic


$

(0.05)



$

(0.02)



$

(0.21)



$

(0.29)


Diluted


$

(0.05)



$

(0.02)



$

(0.21)



$

(0.29)


Weighted average number of shares used
     in calculating net loss per share









Basic


55,191,868



54,391,089



55,042,305



54,291,683


Diluted


55,191,868



54,391,089



55,042,305



54,291,683



Intralinks Holdings, Inc.

 

Consolidated Statements of Cash Flows

(In Thousands)

(unaudited)






Nine Months Ended September 30,



2013


2012

Net loss


$

(11,429)



$

(15,872)


Adjustments to reconcile net loss to net cash provided by operating activities:





Depreciation and amortization


15,142



13,502


Stock-based compensation expense


6,225



4,831


Amortization of intangible assets


17,778



19,928


Amortization of deferred costs


1,160



1,335


Provision for bad debts and customer credits


1,058



1,443


Loss on disposal of fixed assets




16


Impairment of capitalized software




8,377


Deferred taxes


(6,298)



(11,537)


Gain on interest rate swap




(1,455)


Currency remeasurement (gain) loss


(107)



465


Changes in operating assets and liabilities:





Accounts receivable


(1,186)



330


Prepaid expenses and other assets


(2,430)



(3,362)


Accounts payable


3,550



(1,612)


Accrued expenses and other liabilities


710



4,307


Deferred revenue


5,960



486


Net cash provided by operating activities


30,133



21,182


Cash flows from investing activities:





Capital expenditures


(5,432)



(6,882)


Restricted cash


(2,443)




Acquisition


(600)




Capitalized software development costs


(16,575)



(14,676)


Purchase of short-term investments


(36,477)



(31,346)


Maturity of short-term investments


32,596



31,820


Net cash used in investing activities


(28,931)



(21,084)


Cash flows from financing activities:





Proceeds from exercise of stock options and issuance of common stock


1,155



476


Repayments of outstanding financing arrangements


(631)



(300)


Repayments of outstanding principal on long-term debt


(616)



(15,656)


Net cash used in financing activities


(92)



(15,480)


Effect of foreign exchange rate changes on cash and cash equivalents


(265)



(236)


Net increase (decrease) in cash and cash equivalents


845



(15,618)


Cash and cash equivalents at beginning of period


43,798



46,694


Cash and cash equivalents at end of period


$

44,643



$

31,076



Intralinks Holdings, Inc.

 

Reconciliations of GAAP to Non-GAAP Financial Measures
(In Thousands, Except Share and per Share Data)
(unaudited)








Three Months Ended September 30,


Nine Months Ended September 30,



2013


2012


2013


2012

Gross profit


$

43,197



$

39,544



$

124,170



$

112,368


Gross margin


73.1

%


72.2

%


72.2

%


70.5

%

Cost of revenue – stock-based compensation expense

194



121



511



321


Cost of revenue – amortization of intangible assets

2,082



1,986



6,151



8,383


Non-GAAP Gross profit


$

45,473



$

41,651



$

130,832



$

121,072


Non-GAAP Gross margin


76.9

%


76.1

%


76.1

%


76.0

%

Loss from operations


$

(2,647)



$

(1,794)



$

(11,077)



$

(20,553)


Stock-based compensation expense


2,097



1,795



6,225



4,831


Amortization of intangible assets


5,967



5,834



17,778



19,928


Impairment of capitalized software








8,377


Non-GAAP adjusted Operating income


$

5,417



$

5,835



$

12,926



$

12,583


Net loss before income tax


$

(3,298)



$

(2,453)



$

(15,186)



$

(24,911)


Stock-based compensation expense


2,097



1,795



6,225



4,831


Amortization of intangible assets


5,967



5,834



17,778



19,928


Impairment of capitalized software








8,377


Costs related to debt repayments








47


Non-GAAP adjusted net income before tax


4,766



5,176



8,817



8,272


Non-GAAP income tax provision


1,811



1,967



3,350



3,143


Non-GAAP adjusted net income


$

2,955



$

3,209



$

5,467



$

5,129


Net loss


$

(2,516)



$

(1,259)



$

(11,429)



$

(15,872)


Interest expense


1,242



1,171



3,516



5,245


Income tax benefit


(782)



(1,194)



(3,757)



(9,039)


Depreciation and amortization


5,290



4,732



15,142



13,502


Amortization of intangible assets


5,967



5,834



17,778



19,928


Stock-based compensation expense


2,097



1,795



6,225



4,831


Impairment of capitalized software








8,377


Amortization of debt issuance costs


71



177



287



591


Other (income) expense, net


(662)



(689)



306



(1,478)


Non-GAAP adjusted EBITDA


$

10,707



$

10,567



$

28,068



$

26,085


Non-GAAP adjusted EBITDA margin


18.1

%


19.3

%


16.3

%


16.4

%

Net cash flow provided by operating activities


$

10,376



$

2,457



$

30,133



$

21,182


Capital expenditures


(2,143)



(963)



(5,432)



(6,882)


Capitalized software development costs


(5,739)



(4,324)



(16,575)



(14,676)


Free cash flow


$

2,494



$

(2,830)



$

8,126



$

(376)


 


Intralinks Holdings, Inc.

 

Reconciliations of GAAP to Non-GAAP Financial Measures - Guidance
(In Thousands)
(unaudited)








Three Months Ending

December 31, 2013


Year Ending

December 31, 2013

Gross profit


$

42,281



$

166,451


Gross margin


72.9

%


72.4

%

Cost of revenue - stock-based compensation expense


165



676


Cost of revenue - amortization of intangible assets


2,054



8,205


Non-GAAP gross profit


$

44,500



$

175,332


Non-GAAP gross margin


76.7

%


76.3

%






Loss from operations


$

(4,329)



$

(15,406)


Stock-based compensation expense


2,061



8,286


Amortization of intangible assets


5,868



23,646


Non-GAAP adjusted operating income


$

3,600



$

16,526







Net loss before income tax


$

(5,467)



$

(20,653)


Stock-based compensation expense


2,061



8,286


Amortization of intangible assets


5,868



23,646


Non-GAAP adjusted net income before tax


2,462



11,279


Non-GAAP income tax provision


936



4,286


Non-GAAP adjusted net income


$

1,526



$

6,993







Net loss


$

(3,482)



$

(14,911)


Interest expense


1,092



4,608


Income tax benefit


(1,985)



(5,742)


Depreciation and amortization


5,400



20,542


Amortization of intangible assets


5,868



23,646


Stock-based compensation expense


2,061



8,286


Amortization of debt issuance costs


71



358


Other (income) expense, net


(25)



281


Non-GAAP adjusted EBITDA


$

9,000



$

37,068


Non-GAAP adjusted EBITDA margin


15.5

%


16.1

%



Note: All forward-looking figures presented in this table are stated at the mid-point of the estimated range.

SOURCE Intralinks Holdings, Inc.

Investor Contact: David Roy, Intralinks Holdings, Inc., 212-342-7690, droy@intralinks.com; Media Contact: Ian Bruce, Intralinks Holdings, Inc., 508-574-2016, ibruce@intralinks.com