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February 27, 2012 at 16:00 PM EST
IntraLinks Announces Fourth Quarter and Full Year 2011 Results

NEW YORK, Feb. 27, 2012 /PRNewswire/ -- IntraLinks Holdings, Inc. (NYSE: IL), a leading provider of critical information exchange solutions, today announced results for its fourth quarter and full year 2011.

"I am excited to have recently joined IntraLinks to lead the company in its next stage of growth," said Ron Hovsepian, IntraLinks' President and CEO. "In the short time I have been with the company, I have confirmed that IntraLinks has a robust technology platform, a leadership position in several markets and a compelling market opportunity. In addition, I believe our strong financial position and positive cash flow enable us to increase investments in the business that are focused on accelerating long-term revenue growth and creating shareholder value."

Fourth Quarter 2011

Total revenue was $52.9 million, compared to $52.1 million for the corresponding quarter last year.

  • Enterprise revenue was $23.5 million, compared to $23.0 million for the corresponding quarter last year.
  • M&A revenue was $21.0 million, compared to $20.0 million for the corresponding quarter last year.
  • DCM revenue was $8.4 million, compared to $9.1 million for the corresponding quarter last year.

GAAP gross margin was 73.2%, compared to 75.9% for the corresponding quarter last year. Non-GAAP gross margin was 79.6%, compared to 82.4% for the corresponding quarter last year.

GAAP operating income was $2.4 million, compared to $6.3 million for the corresponding quarter last year.  Non-GAAP adjusted operating income was $11.5 million, compared to $15.0 million for the corresponding quarter last year.

GAAP net loss was ($2.5) million, compared to a GAAP net income of $1.0 million for the corresponding quarter last year.  GAAP net loss per share for the fourth quarter was ($0.05) on the basis of 54,096,215 shares outstanding. In the prior year comparable period, diluted GAAP net income per share was $0.02 on the basis of 51,797,179 shares outstanding.

Non-GAAP adjusted net income was $5.7 million, compared to $7.4 million for the corresponding quarter last year. Non-GAAP adjusted net income per share was $0.11 on the basis of 54,617,121 shares outstanding. In the corresponding quarter for the prior year, non-GAAP net income per share was $0.14 on the basis of 53,361,489 shares outstanding. Shares outstanding for the prior period are on a pro forma basis, assuming that the conversion of outstanding preferred stock to common stock and the initial and follow-on offerings of common stock occurred at the beginning of the period.

Non-GAAP adjusted EBITDA was $16.1 million, compared to $19.9 million for the corresponding quarter last year.

Cash flow from operations was $19.6 million, compared to $19.6 million in the corresponding quarter last year.

Full Year 2011

Total revenue was $213.5 million, compared to $184.3 million in the prior year.

  • Enterprise revenue was $94.5 million, compared to $82.8 million last year
  • M&A revenue was $83.8 million, compared to $68.6 million last year
  • DCM revenue was $34.6 million, compared to $32.9 million last year
  • Other revenue of $0.6 million consisted of an insurance recovery for actual lost revenue under a business interruption policy.

GAAP operating income was $8.9 million, compared to $11.2 million in the prior year.  Non-GAAP adjusted operating income was $46.3 million, compared to $45.6 million in the prior year.

GAAP net loss was ($1.2) million, compared to a GAAP net loss of ($12.4) million in the prior year.  GAAP net loss per share for the year was ($0.02) on the basis of 53,381,655 shares outstanding. In the prior year comparable period, GAAP net loss per share was ($0.58) on the basis of 21,310,284 shares outstanding.  

Non-GAAP adjusted net income of $23.5 million, compared to $13.7 million last year.  Non-GAAP adjusted net income per share was $0.43 on the basis of 54,463,080 shares outstanding. In the corresponding period for the prior year, non-GAAP net income per share was $0.26 on the basis of 52,953,642 shares outstanding. Shares outstanding for the prior period are on a pro forma basis, assuming that the conversion of outstanding preferred stock to common stock and the initial and follow-on offerings of common stock occurred at the beginning of the period.

Non-GAAP adjusted EBITDA was $66.3 million, compared to non-GAAP adjusted EBITDA of $62.6 million in the prior year.

Cash flow from operations was $54.7 million, compared to $35.6 million in the prior year.

Deferred revenue on the balance sheet at December 31, 2011 was $40.3 million, compared to $38.0 million at the end of 2010.

First Quarter 2012 Revenue Guidance

IntraLinks anticipates revenue for the first quarter of 2012 to be in the range of $46 million to $49 million.

Quarterly Conference Call

IntraLinks will host a conference call today at 5:00 p.m. Eastern Time (ET) to discuss the company's fourth quarter and full year 2011 financial results, insights into 2012 and other corporate developments. To access this call, dial 866-524-3160 (domestic) or 412-317-6760 (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.  In conjunction with this call, there will also be accompanying slides with supplemental information available at the same website location.

Following the conference call, a replay will be available until March 5, 2012, at 877-870-5176 (domestic) or 858-384-5517 (international). The passcode for the replay is 10009371. 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 (NYSE: IL) is a leading global provider of Software-as-a-Service solutions for securely managing content, exchanging critical business information and collaborating within and among organizations. More than 1 million professionals in industries including financial services, pharmaceutical, biotechnology, consumer, energy, industrial, legal, insurance, real estate and technology, as well as government agencies, have utilized IntraLinks' easy-to-use, cloud-based solutions. IntraLinks users can accelerate information-intensive business processes and workflows, meet regulatory and risk management requirements and collaborate with customers, partners and counterparties in a secure, auditable and compliant manner. Professionals at more than 800 of the Fortune 1000 companies have used IntraLinks' solutions. For more information, visit www.intralinks.com or http://blog.intralinks.com. You can also follow IntraLinks on Twitter at http://twitter.com/intralinks and Facebook at www.facebook.com/IntraLinks.

Non-GAAP Financial Measures

The 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 margin represents the corresponding GAAP measure adjusted to exclude (1) stock-based compensation expense and (2) amortization of intangible assets.
  • Non-GAAP adjusted operating income represents the corresponding GAAP measure adjusted to exclude (1) stock-based compensation expense, (2) amortization of intangible assets, and (3) costs related to public stock offerings.
  • Non-GAAP adjusted net income represents the corresponding GAAP measure adjusted to exclude (1) stock-based compensation expense, (2) amortization of intangible assets, (3) costs related to public stock offerings, and (4) costs related to debt repayments.  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 shares outstanding. Shares outstanding for the prior period are on a pro forma basis, assuming that the conversion of outstanding preferred stock to common stock and the initial and follow-on offerings of common stock occurred at the beginning of the period.
  • Non-GAAP adjusted EBITDA represents net income (loss) adjusted to exclude (1) interest expense, net of interest income, (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) loss on extinguishment of our debt, (8) other expense (income), net and (9) costs related to public stock offerings.

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 and manage the cash needs of our business.  Additionally, management 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 costs related to intangible assets. However, non-GAAP gross margin, non-GAAP adjusted operating income, non-GAAP adjusted net income, non-GAAP adjusted net income per share and non-GAAP adjusted EBITDA are not measures of financial performance under U.S. GAAP and, accordingly, should not be considered as alternatives to gross margin, operating income, net income (loss), and cash flows provided by operations as indicators of operating performance.

A reconciliation of GAAP to Non-GAAP financial measures has been provided in the financial statement tables included in the 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 (the "SEC") from time to time, including our Annual Report on Form 10-K for the year-ended December 31, 2010 and subsequent 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 Holdings, Inc. All rights reserved.

IntraLinks Holdings, Inc.

Consolidated Balance Sheets

(In Thousands, Except Share and per Share Data)

(unaudited)














 December 31,


December 31,





 2011


2010


ASSETS







Current assets:








Cash and cash equivalents

$

46,694


$

50,467



Accounts receivable, net of allowances of  $2,149 and $2,418, respectively


38,895



37,137



Investments


36,120



-



Deferred taxes


12,711



18,264



Prepaid expenses


4,238



5,916



Other current assets


4,567



2,457




Total current assets


143,225



114,241


Fixed assets, net


7,635



8,075


Capitalized software, net


30,287



25,676


Goodwill


215,478



215,478


Other intangibles, net


132,233



160,863


Other assets


1,483



2,022




Total assets

$

530,341


$

526,355









LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:








Accounts payable

$

4,934


$

4,191



Accrued expenses and other current liabilities


19,846



22,444



Deferred revenue


40,309



38,043




Total current liabilities


65,089



64,678


Long term debt


91,164



125,886


Deferred taxes


39,384



46,103


Other long term liabilities


2,874



2,244




Total liabilities


198,511



238,911


Stockholders' equity:








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









issued and outstanding as of December 31, 2011 and December 31, 2010


-



-



Common stock, $0.001 par value; 300,000,000 shares authorized; 54,248,178 and 52,387,374









shares issued and outstanding as of December 31, 2011 and December 31, 2010, respectively


54



52



Additional paid-in capital


411,781



365,962



Accumulated deficit


(80,056)



(78,813)



Accumulated other comprehensive income


51



243




Total stockholders' equity


331,830



287,444




Total liabilities and stockholders' equity

$

530,341


$

526,355



IntraLinks Holdings, Inc.

Consolidated Statements of Operations

(In Thousands Except Share and per Share Data)

(unaudited)





















Three Months Ended



Years Ended






December 31,



December 31,






2011



2010



2011



2010

















Revenue

$

52,935


$

52,118


$

212,890


$

184,332


Other revenue


-



-



614



-



Total revenue


52,935



52,118



213,504



184,332


Cost of revenue


14,193



12,549



56,385



47,496



Gross profit


38,742



39,569



157,119



136,836


Operating expenses:













Product development


3,887



4,179



18,579



17,953


Sales and marketing


21,411



20,995



88,872



79,251


General and administrative


11,073



8,096



40,808



28,435



Total operating expenses


36,371



33,270



148,259



125,639




Income from operations


2,371



6,299



8,860



11,197


Interest expense, net


2,499



4,725



10,645



24,724


Amortization of debt issuance costs


214



1,059



1,369



3,084


Loss on extinguishment of debt


-



-



-



4,974


Other income, net


(576)



(1,515)



(3,123)



(2,722)



Net income (loss) before income tax


234



2,030



(31)



(18,863)


Income tax provision (benefit)


2,731



1,012



1,212



(6,427)



Net (loss) income

$

(2,497)


$

1,018


$

(1,243)


$

(12,436)

















Net (loss) income per common share















Basic

$

(0.05)


$

0.02


$

(0.02)


$

(0.58)




Diluted

$

(0.05)


$

0.02


$

(0.02)


$

(0.58)

















Weighted average number of shares used in














calculating net (loss) income per share















Basic


54,096,215



50,083,596



53,381,655



21,310,284




Diluted


54,096,215



51,797,179



53,381,655



21,310,284



IntraLinks Holdings, Inc.

Consolidated Statement of Cash Flows

(In Thousands)

(unaudited)














Years Ended December 31,







2011



2010


Net loss

$

(1,243)


$

(12,436)


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








Depreciation and amortization


19,999



16,982



Stock-based compensation expense


8,708



4,215



Amortization of intangible assets


28,630



28,741



Amortization of deferred costs


1,472



3,084



Provision for bad debts and customer credits


931



508



Loss (gain) on disposal of fixed assets


228



(224)



Change in deferred taxes


(1,166)



(7,901)



Gain on interest rate swap


(4,193)



(2,778)



Currency remeasurement gain


(318)



-



Loss on extinguishment of debt


-



4,974



Non-cash interest expense





5,648


Changes in operating assets and liabilities:








Accounts receivable


(2,692)



(11,662)



Prepaid expenses and other current assets


(1,804)



(2,479)



Other assets


1,092



(558)



Accounts payable


765



(4,673)



Accrued expenses and other liabilities


1,928



2,728



Deferred revenue


2,389



11,395




Net cash provided by operating activities


54,726



35,564


Cash flows from investing activities:


















Capital expenditures


(5,115)



(6,863)



Capitalized software development costs


(18,718)



(16,128)



Purchase of short-term investments


(40,120)



(4,320)



Sale and maturity of short-term investments


4,000



7,770




Net cash used in investing activities


(59,953)



(19,541)


Cash flows from financing activities:








Proceeds from exercise of stock options


1,374



306



Proceeds from issuance of common stock


1,251



210



Offering costs paid in connection with initial public offering and follow-on offerings


(517)



(2,365)



Capital lease payments


-



(27)



Payment of financing costs


-



(1,663)



Proceeds from follow-on offering, net of underwriting discounts and commissions


35,003



182,838



Repayments of outstanding principal on long-term debt


(35,656)



(171,456)



Prepayment penalty on PIK loan


-



(4,092)





Net cash provided by financing activities


1,455



3,751



Effect of foreign exchange rate changes on cash and cash equivalents


(1)



212



Net (decrease) increase in cash and cash equivalents


(3,773)



19,986



Cash and cash equivalents at beginning of period


50,467



30,481



Cash and cash equivalents at end of period

$

46,694


$

50,467



IntraLinks Holdings, Inc.

Reconciliation of Non-GAAP to GAAP Financial Measures

(In Thousands)

(unaudited)
















Three Months Ended


Years Ended



December 31,


December 31,



2011


2010


2011


2010


Gross profit

$

38,742


$

39,569


$

157,119


$

136,836


Gross margin


73.2%



75.9%



73.6%



74.2%


Cost of revenue - stock-based compensation expense


92



41



310



105


Cost of revenue - amortization of intangible assets


3,310



3,310



13,237



13,237


Non-GAAP gross profit

$

42,144


$

42,920


$

170,666


$

150,178


Non-GAAP gross margin


79.6%



82.4%



79.9%



81.5%















Income from operations

$

2,371


$

6,299


$

8,860


$

11,197


Stock-based compensation expense


1,943



1,369



8,708



4,215


Amortization of intangible assets


7,158



7,158



28,630



28,741


Costs related to public stock offerings


-



195



57



1,416


Non-GAAP adjusted operating income

$

11,472


$

15,021


$

46,255


$

45,569















Net income (loss) before income tax

$

234


$

2,030


$

(31)


$

(18,863)


Stock - based compensation expense


1,943



1,369



8,708



4,215


Amortization of intangible assets


7,158



7,158



28,630



28,741


Costs related to public stock offerings


-



195



57



1,416


Costs related to debt repayments


-



1,402



-



7,011


Non-GAAP adjusted net income before tax


9,335



12,154



37,364



22,520


Non-GAAP income tax provision


3,594



4,740



13,825



8,783


Non-GAAP adjusted net income

$

5,741


$

7,414


$

23,539


$

13,737















Net (loss) income

$

(2,497)


$

1,018


$

(1,243)


$

(12,436)


Interest expense, net


2,499



4,725



10,645



24,724


Income tax benefit


2,731



1,012



1,212



(6,427)


Depreciation and amortization


4,598



4,844



19,999



16,982


Amortization of intangible assets


7,158



7,158



28,630



28,741


Stock-based compensation expense


1,943



1,369



8,708



4,215


Amortization of debt issuance costs


214



1,059



1,369



3,084


Loss on extinguishment of debt


-



-



-



4,974


Other income


(576)



(1,515)



(3,123)



(2,722)


Costs related to public stock offerings


-



195



57



1,416


Non-GAAP adjusted EBITDA

$

16,070


$

19,865


$

66,254


$

62,551


Non-GAAP adjusted EBITDA margin


30.4%



38.1%



31.0%



33.9%















Cash flow provided by operations

$

19,611


$

19,592


$

54,726


$

35,564


Capital expenditures


(4,900)



(3,971)



(23,833)



(22,991)


Free cash flow

$

14,711


$

15,621


$

30,893


$

12,573



SOURCE IntraLinks Holdings, Inc.

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