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Intralinks Announces Third Quarter 2015 Results

NEW YORK--(BUSINESS WIRE)--Nov. 4, 2015-- Intralinks Holdings, Inc. (NYSE:IL), a leading, global SaaS provider of secure content collaboration solutions, today announced its results for the third quarter ended September 30, 2015.

“The investments we’re making in our platform are positioning us well in the market, with offerings that provide customers with the security and collaboration capabilities that they increasingly demand. As a result, the business continued to perform during the third quarter, with overall revenue increasing by 12% in constant currency year-over-year,” said Ron Hovsepian, Intralinks’ president and CEO. “Both our Enterprise and M&A businesses remained strong with each posting 12% year-over-year constant currency growth. Enterprise 12-month backlog increased 18% as customers continue to respond positively to our offerings. The business is positioned to finish 2015 strongly.”

Third Quarter 2015

Total revenue was $69.6 million, compared to $65.6 million for the corresponding quarter last year, an increase of 6% or 12% in constant currency.

  • M&A revenue was $35.6 million, compared to $33.9 million for the corresponding quarter last year, an increase of 5% or 12% in constant currency.
  • Enterprise revenue was $27.1 million, compared to $25.1 million for the corresponding quarter last year, an increase of 8% or 12% in constant currency.
  • DCM revenue was $6.9 million, compared to $6.6 million for the corresponding quarter last year, an increase of 5% in both actual and constant currency.

GAAP gross margin was 72.3%, compared to 74.0% for the corresponding quarter last year. Non-GAAP adjusted gross margin was 75.5%, compared to 77.4% for the corresponding quarter last year.

GAAP operating loss was $(4.7) million, compared to $(3.9) million for the corresponding quarter last year. Non-GAAP adjusted operating income was $4.3 million, compared to $4.9 million for the corresponding quarter last year.

GAAP net loss was $(6.6) million, compared to $(4.4) million for the corresponding quarter last year. GAAP net loss per share was $(0.11) on the basis of 57.4 million weighted average shares outstanding. In the corresponding quarter last year, GAAP net loss per share was $(0.08) on the basis of 56.0 million weighted average shares outstanding.

Non-GAAP adjusted net income was $1.8 million, compared to $1.6 million for the corresponding quarter last year. Non-GAAP adjusted net earnings per share was $0.03 on the basis of 59.4 million weighted average shares outstanding. In the corresponding quarter last year, non-GAAP adjusted net income per share was $0.03 on the basis of 57.5 million weighted average shares outstanding.

Non-GAAP adjusted EBITDA was $11.0 million, compared to $11.4 million for the corresponding quarter last year.

Cash, cash equivalents and investments were $56.9 million at September 30, 2015 compared to $56.8 million at June 30, 2015.

Business Outlook:

Based on information available as of November 4, 2015, Intralinks is providing guidance for 2015 as follows:

Full Year 2015

Revenue: $273.5 million to $275.0 million
GAAP operating loss: $(25.9) million to $(23.9) million
Non-GAAP adjusted operating income: $10.0 million to $12.0 million
Non-GAAP adjusted EBITDA: $38.0 million to $40.0 million
GAAP net loss per share: $(0.58) to $(0.54)
Non-GAAP adjusted net income per share: $0.05 to $0.07

Our full-year guidance above is based on current foreign exchange rates. Excluding the impact of foreign currency exchange rates, our full-year guidance at the midpoint reflects 12% revenue growth.

Quarterly Conference Call

Intralinks will host a conference call today at 5:00 p.m. Eastern Time (ET) to discuss the company's third quarter 2015 financial results and business outlook. To access this call, dial 888-348-8637 (domestic) or 412-902-4244 (international). A passcode is not required. This presentation will also be webcast live on the investor relations section on the Intralinks website at www.Intralinks.com/ir.

Following the conference call, a replay will be available until November 11, 2015 at 877-870-5176 (domestic) or 858-384-5517 (international). The passcode for the replay is 10074187. An archived webcast of this conference 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 secure enterprise content collaboration solutions. Through innovative Software-as-a-Service solutions, Intralinks software is 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 $28.1 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”). 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 and (3) impairment charges or asset write-offs.
  • 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 and (3) impairment charges or asset write-offs. 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, and (8) income tax (benefit) expense.
  • Free cash flow represents net cash provided by operating activities less capitalized software development costs and capital expenditures.
  • The Company refers to growth rates at constant currency so that the results can be viewed without the impact of fluctuations in foreign currency exchange rates to facilitate comparisons of the Company's performance from one period to another. Constant currency for revenue is calculated by retranslating current and prior period revenue at a consistent rate.

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, stock-based compensation expense 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. 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; fluctuations in currency exchange rates; 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, 2014 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”, “Intralinks VIA” and the Intralinks stylized logo are registered trademarks of Intralinks, Inc. © 2015 Intralinks, Inc.

     

Intralinks Holdings, Inc.

Consolidated Balance Sheets

(In Thousands, Except Share Data)

(unaudited)

 
 

September 30,
2015

  December 31,
2014
 
ASSETS
Current assets:
Cash and cash equivalents $ 39,435 $ 40,682
Investments 17,481 11,825
Accounts receivable, net of allowances of $4,582 and $3,158, respectively 52,165 47,338
Deferred taxes 6,059 9,578
Prepaid expenses 7,455 6,602
Other current assets 4,217   3,626  
Total current assets 126,812 119,651
Investments 12,630
Fixed assets, net 20,863 16,245
Capitalized software, net 44,269 39,798
Goodwill 224,383 224,383
Other intangibles, net 44,094 62,055
Other assets 7,900   6,676  
Total assets $ 468,321   $ 481,438  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts Payable $ 13,014 $ 10,624
Current portion of long-term debt 800 906
Deferred revenue 52,525 49,193
Accrued expenses and other current liabilities 27,997   26,974  
Total current liabilities 94,336 87,697
Long-term debt 77,453 77,933
Deferred taxes 6,059 9,578
Other long-term liabilities 4,882 5,291
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; 58,257,919 and
57,084,340 shares issued and outstanding, respectively

58 57
Additional paid-in capital 453,205 441,596
Accumulated deficit (163,614 ) (139,210 )
Accumulated other comprehensive loss (4,058 ) (1,504 )
Total stockholders' equity 285,591   300,939  
Total liabilities and stockholders' equity $ 468,321   $ 481,438  
 

       

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,
2015   2014 2015   2014
Revenue $ 69,588 $ 65,605 $ 204,869 $ 188,403
Cost of revenue 19,304   17,082   57,189   51,167  
Gross profit 50,284 48,523 147,680 137,236
Operating expenses:
Sales and marketing 29,496 29,366 91,666 85,357
General and administrative 18,652 17,930 55,406 52,883
Product development 6,859   5,150   19,107   16,075  
Total operating expenses 55,007   52,446   166,179   154,315  
Loss from operations (4,723 ) (3,923 ) (18,499 ) (17,079 )
Interest expense 1,124 1,126 3,323 3,091
Amortization of debt issuance costs 143 143 429 436
Other expense, net 151   995   989   786  
Net loss before income tax (6,141 ) (6,187 ) (23,240 ) (21,392 )
Income tax expense (benefit) 420   (1,836 ) 1,164   (5,989 )
Net loss $ (6,561 ) $ (4,351 ) $ (24,404 ) $ (15,403 )
Net loss per common share:
Basic $ (0.11 ) $ (0.08 ) $ (0.43 ) $ (0.28 )
Diluted $ (0.11 ) $ (0.08 ) $ (0.43 ) $ (0.28 )
Weighted average number of shares:
Basic 57,446,774   56,001,583   56,970,515   55,799,506  
Diluted 57,446,774   56,001,583   56,970,515   55,799,506  
 

   

Intralinks Holdings, Inc.

Consolidated Statements of Cash Flows

(In Thousands)

(unaudited)

 
 
Nine months ended September 30,
2015   2014
Cash flows from operating activities:
Net loss $ (24,404 ) $ (15,403 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 20,222 18,779
Amortization of intangible assets 17,961 17,803
Stock-based compensation expense 8,932 7,684
Deferred income tax benefit (9,100 )
Other, net 3,192 3,206
Changes in operating assets and liabilities:
Accounts receivable (7,419 ) (12,070 )
Prepaid expenses and other assets (2,510 ) (1,814 )
Accounts payable 2,254 914
Accrued expenses and other liabilities 349 (929 )
Deferred revenue 3,577   4,522  
Net cash provided by operating activities 22,154   13,592  
Cash flows from investing activities:
Capitalized software development costs (18,594 ) (19,652 )
Capital expenditures (10,589 ) (7,041 )
Purchases of investments (27,062 )
Maturities of investments 6,750 29,179
Purchases of cost method investments (1,000 ) (3,499 )
Acquisitions, net of cash acquired (8,632 )
Restricted cash   2,443  
Net cash used in investing activities (23,433 ) (34,264 )
Cash flows from financing activities:
Proceeds from issuance of long-term debt 79,200
Payments on long-term debt (600 ) (75,298 )
Payments of outstanding financing arrangements (228 ) (300 )
Debt issuance costs (2,829 )
Exercise of stock options and issuance of common stock, net of withholding taxes 2,677 474
Other (562 ) (188 )
Net cash provided by financing activities 1,287 1,059
Effect of foreign exchange rate changes on cash and cash equivalents (1,255 ) (44 )
Net decrease in cash and cash equivalents (1,247 ) (19,657 )
Cash and cash equivalents at beginning of period 40,682   50,540  
Cash and cash equivalents at end of period $ 39,435   $ 30,883  
 

     

Intralinks Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In Thousands)

(unaudited)

 
 
Three Months Ended September 30, Nine Months Ended September 30,
2015   2014 2015   2014
Gross profit $ 50,284 $ 48,523 $ 147,680 $ 137,236
Gross margin 72.3 % 74.0 % 72.1 % 72.8 %
Cost of revenue – amortization of intangible assets 2,083 2,089 6,248 6,123
Cost of revenue – stock-based compensation expense 142   151   358   423  
Non-GAAP adjusted gross profit $ 52,509   $ 50,763   $ 154,286   $ 143,782  
Non-GAAP adjusted gross margin 75.5 % 77.4 % 75.3 % 76.3 %
 
Loss from operations $ (4,723 ) $ (3,923 ) $ (18,499 ) $ (17,079 )
Amortization of intangible assets 5,986 5,989 17,961 17,803
Stock-based compensation expense 3,068   2,787   8,932   7,684  
Non-GAAP adjusted operating income $ 4,331   $ 4,853   $ 8,394   $ 8,408  
 
Net loss before income tax $ (6,141 ) $ (6,187 ) $ (23,240 ) $ (21,392 )
Amortization of intangible assets 5,986 5,989 17,961 17,803
Stock-based compensation expense 3,068   2,787   8,932   7,684  
Non-GAAP adjusted net income before tax 2,913 2,589 3,653 4,095
Non-GAAP income tax expense 1,107   984   1,388   1,556  
Non-GAAP adjusted net income $ 1,806   $ 1,605   $ 2,265   $ 2,539  
 
Net loss $ (6,561 ) $ (4,351 ) $ (24,404 ) $ (15,403 )
Depreciation and amortization 6,661 6,545 20,222 18,779
Amortization of intangible assets 5,986 5,989 17,961 17,803
Stock-based compensation expense 3,068 2,787 8,932 7,684
Interest expense 1,124 1,126 3,323 3,091
Amortization of debt issuance costs 143 143 429 436
Other expense, net 151 995 989 786
Income tax expense (benefit) 420   (1,836 ) 1,164   (5,989 )
Non-GAAP adjusted EBITDA $ 10,992   $ 11,398   $ 28,616   $ 27,187  
Non-GAAP adjusted EBITDA margin 15.8 % 17.4 % 14.0 % 14.4 %
 
Net cash provided by operating activities $ 14,204 $ 2,705 $ 22,154 $ 13,592
Capitalized software development costs (7,382 ) (6,550 ) (18,594 ) (19,652 )
Capital expenditures (7,809 ) (2,598 ) (10,589 ) (7,041 )
Free cash flow $ (987 ) $ (6,443 ) $ (7,029 ) $ (13,101 )
 

       

Intralinks Holdings, Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures - Guidance

(In Thousands)

(unaudited)

 
 

Three Months
Ending

December 31,
2015

Year Ending

December 31,
2015

Gross profit $ 48,642 $ 196,322
Gross margin 70.1 % 71.6 %
Cost of revenue - amortization of intangible assets 2,083 8,331
Cost of revenue - stock-based compensation expense 140   498  
Non-GAAP adjusted gross profit $ 50,865   $ 205,151  
Non-GAAP adjusted gross margin 73.3 % 74.8 %
 
Loss from operations $ (6,407 ) $ (24,906 )
Amortization of intangible assets 5,988 23,949
Stock-based compensation expense 3,025   11,957  
Non-GAAP adjusted operating income $ 2,606   $ 11,000  
 
Net loss before income tax $ (7,382 ) $ (30,622 )
Amortization of intangible assets 5,988 23,949
Stock-based compensation expense 3,025   11,957  
Non-GAAP adjusted net income before tax 1,631 5,284
Non-GAAP income tax expense 620   2,008  
Non-GAAP adjusted net income $ 1,011   $ 3,276  
 
Net loss $ (7,861 ) $ (32,265 )
Depreciation and amortization 7,778 28,000
Amortization of intangible assets 5,988 23,949
Stock-based compensation expense 3,025 11,957
Interest expense 881 4,204
Amortization of debt issuance costs 143 572
Other (income) expense, net (50 ) 939
Income tax expense 480   1,644  
Non-GAAP adjusted EBITDA $ 10,384   $ 39,000  
Non-GAAP adjusted EBITDA margin 15.0 % 14.2 %
 

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

Source: Intralinks Holdings, Inc.

Intralinks Holdings, Inc.
Investors:
Dean Ridlon, 617-607-3957
dridlon@intralinks.com
or
Media:
Ian Bruce, (Cell) 508-574-2016
ibruce@intralinks.com