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Intralinks Announces Third Quarter 2014 Results

NEW YORK, Nov. 5, 2014 /PRNewswire/ -- Intralinks Holdings, Inc. (NYSE: IL), a leading, global SaaS provider of inter-enterprise content collaboration solutions, today announced results for its third quarter of 2014.

"We achieved 11% revenue growth in the third quarter," said Ron Hovsepian, Intralinks' president and CEO. "Double-digit percentage growth in total revenue, twelve month total backlog and twelve month Enterprise backlog led to the best quarter we have had in several years and gives us increased confidence we can achieve our long-term goals of 15% - 20% revenue growth and 15% - 20% operating margin."

Third Quarter 2014

Total revenue was $65.6 million, compared to $59.1 million for the corresponding quarter last year.

  • M&A revenue was $33.9 million, compared to $28.7 million for the corresponding quarter last year.
  • Enterprise revenue was $25.1 million, compared to $23.2 million for the corresponding quarter last year.
  • DCM revenue was $6.6 million, compared to $7.2 million for the corresponding quarter last year.

GAAP gross margin was 74.0%, compared to 73.1% for the corresponding quarter last year. Non-GAAP adjusted gross margin was 77.4%, compared to 76.9% for the corresponding quarter last year.

GAAP operating loss was $(3.9) million, compared to $(2.6) million for the corresponding quarter last year.  Non-GAAP adjusted operating income was $4.9 million, compared to $5.4 million for the corresponding quarter last year.

GAAP net loss was $(4.4) million, compared to $(2.5) million for the corresponding quarter last year.  GAAP net loss per share was $(0.08) on the basis of 56.0 million shares outstanding. In the corresponding quarter last year, GAAP net loss per share was $(0.05) on the basis of 55.2 million shares outstanding.

Non-GAAP adjusted net income was $1.6 million, compared to $3.0 million for the corresponding quarter last year. Non-GAAP adjusted net income per share was $0.03 on the basis of 57.5 million shares outstanding. In the corresponding quarter last year, non-GAAP adjusted net income per share was $0.05 on the basis of 56.3 million shares outstanding.

Non-GAAP adjusted EBITDA was $11.4 million, compared to $10.7 million for the corresponding quarter last year.

Cash and investments was $63.2 million at the end of the quarter, down from $72.5 million at the end of the second quarter.

Business Outlook:

Based on information available as of November 5, 2014, Intralinks is providing guidance for the fourth quarter 2014 as follows:

Fourth Quarter 2014

Revenue: $65.0 million to $67.0 million
GAAP operating loss: $(6.1) million to $(5.1) million
Non-GAAP adjusted operating income: $2.6 million to $3.6 million
Non-GAAP adjusted EBITDA: $9.8 million to $10.8 million
GAAP net loss per share: $(0.08) to $(0.07)
Non-GAAP adjusted net income per share: $0.01 to $0.03

Quarterly Conference Call

In conjunction with this announcement, Intralinks will host a conference call on Wednesday, November 5, 2014 at 5:00 p.m. Eastern Time (ET) to discuss its third quarter financial results and 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 12, 2014, at 877-870-5176 (domestic) or 858-384-5517 (international). The passcode for the replay is 10053298. 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 collaboration solutions. Through innovative Software-as-a-Service solutions, Intralinks solutions are designed to enable the exchange, control, and management of information between organizations securely and compliantly when working through the firewall. More than 3.1 million professionals at 99% of the Fortune 1000 companies have depended 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 adjusted gross profit and non-GAAP adjusted gross margin, non-GAAP adjusted operating income, non-GAAP adjusted net income, non-GAAP adjusted net income per share, non-GAAP adjusted EBITDA and non-GAAP adjusted EBITDA margin and free cash flow. 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 adjusted gross profit represents the corresponding GAAP measure adjusted to exclude, if applicable: (1) amortization of intangible assets and (2) stock-based compensation expense.
  • Non-GAAP adjusted operating income represents the corresponding GAAP measure adjusted to exclude, if applicable: (1) amortization of intangible assets, (2) stock-based compensation expense, (3) impairment charges or asset write-offs and (4) costs related to public stock offerings.
  • Non-GAAP adjusted net income represents the corresponding GAAP measure adjusted to exclude, if applicable: (1) amortization of intangible assets, (2) stock-based compensation expense, (3) impairment charges or asset write-offs, (4) costs related to debt repayments and (5) costs related to public stock offerings. The income tax expense included in non-GAAP adjusted net income is calculated using an estimated long-term effective tax rate.
  • Non-GAAP adjusted net income per share represents non-GAAP adjusted net income (which is defined above) divided by fully diluted weighted average shares outstanding.
  • Non-GAAP adjusted EBITDA represents net loss adjusted to exclude, if applicable: (1) depreciation and amortization, (2) amortization of intangible assets, (3) stock-based compensation expense, (4) impairment charges or asset write-offs, (5) interest expense, (6) amortization of debt issuance costs, (7) other (income) expense, net, (8) costs related to public stock offerings and (9) income tax (benefit) expense.
  • Free cash flow represents net cash provided by operating activities less capitalized software development costs and capital expenditures.

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-over-period basis, because these measures exclude items that are not representative of our operating performance, such as amortization of intangible assets and interest expense. 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 adjusted 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, loss from operations, net loss, net loss per share and net cash provided by operating activities as indicators of operating performance.

Reconciliations of GAAP to Non-GAAP financial measures are 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 expressed 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 or to attain our enterprise backlog objectives; periodic fluctuations in our operating results; our ability to manage our expected growth; risks related to our substantial debt balances and our ability to generate or obtain sufficient capital to service our debt and fund our business; our ability to maintain the security and integrity of our systems; risks associated with the privacy and protection of information in our possession; our ability to increase our penetration in our principal existing markets and expand into additional markets; our ability to expand into new geographic markets; delays in market adoption and penetration of our products and services; difficulties developing, integrating and introducing new products and services; our dependence on the volume of financial and strategic business transactions; our dependence on customer referrals and relationships; 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 and attrition; 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; uncertainties surrounding domestic and global economic conditions; 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 data privacy and 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, 2013 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. © 2014. All rights reserved.

 

Intralinks Holdings, Inc.

Consolidated Balance Sheets

(In Thousands, Except Share Data)

(unaudited)




September 30,
 2014


December 31,
 2013

ASSETS







Current assets:







Cash and cash equivalents


$

30,883



$

50,540


Investments


14,499



34,886


Accounts receivable, net of allowances of $3,453 and $3,152, respectively


48,286



38,322


Deferred taxes


13,264



12,148


Prepaid expenses


7,649



6,036


Restricted cash




2,442


Other current assets


4,370



4,576


Total current assets


118,951



148,950


Investments


17,769




Fixed assets, net


17,128



14,100


Capitalized software, net


38,292



32,341


Goodwill


224,383



215,869


Other intangibles, net


68,043



83,648


Other assets


7,130



1,054


Total assets


$

491,696



$

495,962


LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:







Accounts payable


$

13,361



$

11,052


Current portion of long-term debt


940



209


Deferred revenue


49,447



44,651


Accrued expenses and other current liabilities


25,651



26,667


Total current liabilities


89,399



82,579


Long-term debt


78,093



75,004


Deferred taxes


9,196



16,989


Other long-term liabilities


6,346



5,289


Total liabilities


183,034



179,861


Commitments and contingencies







Stockholders' equity:







Undesignated Preferred Stock, $0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding





Common Stock, $0.001 par value; 300,000,000 shares authorized; 56,707,832 and
56,054,484 shares issued and outstanding, respectively


57



56


Additional paid-in capital


437,707



429,549


Accumulated deficit


(128,117)



(112,714)


Accumulated other comprehensive loss


(985)



(790)


Total stockholders' equity


308,662



316,101


Total liabilities and stockholders' equity


$

491,696



$

495,962


 

Intralinks Holdings, Inc.

Consolidated Statements of Operations

(In Thousands, Except Share Data)

(unaudited)




Three Months Ended September 30,


Nine Months Ended September 30,



2014


2013


2014


2013

Revenue


$

65,605



$

59,116



$

188,403



$

171,879


Cost of revenue


17,082



15,919



51,167



47,709


Gross profit


48,523



43,197



137,236



124,170


Operating expenses:













Sales and marketing


29,366



27,122



85,357



79,310


General and administrative


17,930



13,844



52,883



41,701


Product development


5,150



4,878



16,075



14,236


Total operating expenses


52,446



45,844



154,315



135,247


Loss from operations


(3,923)



(2,647)



(17,079)



(11,077)


Interest expense


1,126



1,242



3,091



3,516


Amortization of debt issuance costs


143



71



436



287


Other expense (income), net


995



(662)



786



306


Net loss before income tax


(6,187)



(3,298)



(21,392)



(15,186)


Income tax benefit


(1,836)



(782)



(5,989)



(3,757)


Net loss


$

(4,351)



$

(2,516)



$

(15,403)



$

(11,429)


Net loss per common share













Basic


$

(0.08)



$

(0.05)



$

(0.28)



$

(0.21)


Diluted


$

(0.08)



$

(0.05)



$

(0.28)



$

(0.21)


Weighted average number of shares













Basic


56,001,583



55,191,868



55,799,506



55,042,305


Diluted


56,001,583



55,191,868



55,799,506



55,042,305


 

Intralinks Holdings, Inc.

Consolidated Statements of Cash Flows

(In Thousands)

(unaudited)




Nine months ended September 30,



2014


2013

Cash flows from operating activities:







Net loss


$

(15,403)



$

(11,429)


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







Depreciation and amortization


18,779



15,142


Amortization of intangible assets


17,803



17,778


Stock-based compensation expense


7,684



6,225


Deferred income tax benefit


(9,100)



(6,298)


Other, net


3,206



2,111


Changes in operating assets and liabilities:







Accounts receivable


(12,070)



(1,186)


Prepaid expenses and other assets


(1,814)



(2,430)


Accounts payable


914



3,550


Accrued expenses and other liabilities


(929)



710


Deferred revenue


4,522



5,960


Net cash provided by operating activities


13,592



30,133


Cash flows from investing activities:







Capitalized software development costs


(19,652)



(16,575)


Capital expenditures


(7,041)



(5,432)


Purchases of investments


(27,062)



(36,477)


Maturities of investments


29,179



32,596


Purchases of cost method investments


(3,499)




Acquisitions, net of cash acquired


(8,632)



(600)


Restricted cash


2,443



(2,443)


Net cash used in investing activities


(34,264)



(28,931)


Cash flows from financing activities:







Proceeds from issuance of long-term debt


79,200




Payments on long-term debt


(75,298)



(616)


Payments of outstanding financing arrangements


(300)



(631)


Deferred financing costs


(2,829)




Exercise of stock options and issuance of common stock, net of withholding taxes


474



1,155


Other


(188)




Net cash provided by (used in) financing activities


1,059



(92)


Effect of foreign exchange rate changes on cash and cash equivalents


(44)



(265)


Net (decrease) increase in cash and cash equivalents


(19,657)



845


Cash and cash equivalents at beginning of period


50,540



43,798


Cash and cash equivalents at end of period


$

30,883



$

44,643


 

Intralinks Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In Thousands)

(unaudited)




Three Months Ended September 30,


Nine Months Ended September 30,



2014


2013


2014


2013

Gross profit


$

48,523



$

43,197



$

137,236



$

124,170


Gross margin


74.0

%


73.1

%


72.8

%


72.2

%

Cost of revenue – amortization of intangible assets


2,089



2,082



6,123



6,151


Cost of revenue – stock-based compensation expense


151



194



423



511


Non-GAAP adjusted gross profit


$

50,763



$

45,473



$

143,782



$

130,832


Non-GAAP adjusted gross margin


77.4

%


76.9

%


76.3

%


76.1

%














Loss from operations


$

(3,923)



$

(2,647)



$

(17,079)



$

(11,077)


Amortization of intangible assets


5,989



5,967



17,803



17,778


Stock-based compensation expense


2,787



2,097



7,684



6,225


Non-GAAP adjusted operating income


$

4,853



$

5,417



$

8,408



$

12,926















Net loss before income tax


$

(6,187)



$

(3,298)



$

(21,392)



$

(15,186)


Amortization of intangible assets


5,989



5,967



17,803



17,778


Stock-based compensation expense


2,787



2,097



7,684



6,225


Non-GAAP adjusted net income before tax


2,589



4,766



4,095



8,817


Non-GAAP income tax expense


984



1,811



1,556



3,350


Non-GAAP adjusted net income


$

1,605



$

2,955



$

2,539



$

5,467















Net loss


$

(4,351)



$

(2,516)



$

(15,403)



$

(11,429)


Depreciation and amortization


6,545



5,290



18,779



15,142


Amortization of intangible assets


5,989



5,967



17,803



17,778


Stock-based compensation expense


2,787



2,097



7,684



6,225


Interest expense


1,126



1,242



3,091



3,516


Amortization of debt issuance costs


143



71



436



287


Other expense (income), net


995



(662)



786



306


Income tax benefit


(1,836)



(782)



(5,989)



(3,757)


Non-GAAP adjusted EBITDA


$

11,398



$

10,707



$

27,187



$

28,068


Non-GAAP adjusted EBITDA margin


17.4

%


18.1

%


14.4

%


16.3

%














Net cash provided by operating activities


$

2,705



$

10,376



$

13,592



$

30,133


Capitalized software development costs


(6,550)



(5,739)



(19,652)



(16,575)


Capital expenditures


(2,598)



(2,143)



(7,041)



(5,432)


Free cash flow


$

(6,443)



$

2,494



$

(13,101)



$

8,126


 

Intralinks Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures - Guidance

(In Thousands)

(unaudited)




Three Months Ending

December 31, 2014


Year Ending

December 31, 2014

Gross profit


$

47,589



$

184,825


Gross margin


72.1

%


72.7

%

Cost of revenue - amortization of intangible assets


2,088



8,211


Cost of revenue - stock-based compensation expense


173



596


Non-GAAP adjusted gross profit


$

49,850



$

193,632


Non-GAAP adjusted gross margin


75.5

%


76.1

%








Loss from operations


$

(5,602)



$

(22,681)


Amortization of intangible assets


5,986



23,789


Stock-based compensation expense


2,716



10,400


Non-GAAP adjusted operating income


$

3,100



$

11,508









Net loss before income tax


$

(6,862)



$

(28,254)


Amortization of intangible assets


5,986



23,789


Stock-based compensation expense


2,716



10,400


Non-GAAP adjusted net income before tax


1,840



5,935


Non-GAAP income tax expense


699



2,255


Non-GAAP adjusted net income


$

1,141



$

3,680









Net loss


$

(4,435)



$

(19,838)


Depreciation and amortization


7,200



25,979


Amortization of intangible assets


5,986



23,789


Stock-based compensation expense


2,716



10,400


Interest expense


1,117



4,208


Amortization of debt issuance costs


143



579


Other (income) expense, net




786


Income tax benefit


(2,427)



(8,416)


Non-GAAP adjusted EBITDA


$

10,300



$

37,487


Non-GAAP adjusted EBITDA margin


15.6

%


14.7

%

Note: All forward-looking figures presented in these tables 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, or Media Contact: Ian Bruce, Intralinks Holdings, Inc., 508-574-2016, ibruce@intralinks.com