Fourth Quarter Revenues of $216.8 Million &
11.5% Growth in License Revenues
Fiscal Year 2010 Revenues of $767.1 Million &
14.8% Growth in License Revenues
Increases Stock Repurchase Program to $150 Million
Quest Software, Inc. (Nasdaq: QSFT) today reported financial results for the quarter and year ended Dec. 31, 2010. Total revenues were $216.8 million, an 11.4% increase compared to the prior year’s fourth quarter revenue of $194.5 million, while license revenues grew 11.5% to $98.0 million. Total revenues for the year ended Dec. 31, 2010, were $767.1 million, a 10.3% increase compared to $695.2 million for the same period in 2009. Operating margins were 14.4% and 15.7% for the three and twelve months ended Dec. 31, 2010, respectively, as compared to 23.4% and 12.0% for the three and twelve months ended Dec. 31, 2009, respectively. On a non-GAAP basis, operating margins were 22.6% and 23.1% for the three and twelve months ended Dec. 31, 2010.
Cash and investments at Dec. 31, 2010, totaled $492.3 million, an increase of $82.1 million over the comparable balance at Sep. 30, 2010. Cash flow from operations was $62.7 million for the three months ended Dec. 31, 2010.
“We continued to execute in the fourth quarter, delivering solid revenue growth,” said Doug Garn, President and CEO of Quest Software. “In 2010, we delivered 14.0% non-GAAP operating income growth to $177.4 million and 16.0% diluted earnings per share growth to $1.45 per fully diluted share. Our 14.8% increase in license revenue demonstrates the strength of the market momentum we are seeing. With our strong technology and services portfolio, coupled with a compelling product roadmap, we remain confident that we will continue to extend our market leadership into the future.”
Increase to Stock Repurchase Program
Quest Software also announced today that its board of directors has increased the authorization under its current stock repurchase program to an aggregate of up to $150 million of its common stock. Any stock repurchases may be made through open market and privately negotiated transactions, at times and in such amounts as management deems appropriate, including pursuant to one or more Rule 10b5-1 trading plans. Rule 10b5-1 permits Quest Software to establish, while not in possession of material nonpublic information, prearranged plans to buy stock at a specific price in the future, regardless of any subsequent possession of material nonpublic information. The timing and actual number of shares repurchased will depend on a variety of factors including market conditions, corporate and regulatory requirements, and capital availability. The stock repurchase program does not have an expiration date and may be limited or terminated at any time without prior notice.
Quest Software expects net income for the fourth quarter of 2010 to be $30.3 million, or $0.32 per fully diluted share. This compares to net income of $37.0 million, or $0.40 per share on a fully diluted basis, for the fourth quarter of 2009. Operating margin was 14.4% in the fourth quarter of 2010 compared to 23.4% in the comparable period of 2009, resulting in operating income of $31.2 million, which compares to $45.5 million for the corresponding period in 2009. Net income for the year ended Dec. 31, 2010, was $98.6 million, or $1.06 per fully diluted share compared to net income of $70.4 million, or $0.75 per fully diluted share for the same period in 2009. Operating margins increased year-over-year from 12.0% to 15.7% in the fiscal year, resulting in operating income of $120.6 million, compared to $83.5 million for the corresponding period in 2009.
On a non-GAAP basis, net income for the fourth quarter of 2010 is expected to be $38.0 million, or $0.40 per fully diluted share. This compares to non-GAAP net income of $36.9 million, or $0.40 per share on a fully diluted basis, for the fourth quarter of 2009. The non-GAAP operating margin was 22.6% in the fourth quarter of 2010, resulting in non-GAAP operating income of $49.0 million, compared to non-GAAP
operating margin and operating income of 24.8% and $48.3 million, respectively, for the corresponding period in 2009. For the year ended Dec. 31, 2010, non-GAAP net income was $135.0 million, or $1.45 per fully diluted share. This compares to non-GAAP net income of $117.8 million, or $1.25 per fully diluted share, for the year ended Dec. 31, 2009. The non-GAAP operating margin was 23.1% for the year ended Dec. 31, 2010, resulting in non-GAAP operating income of $177.4 million, compared to non-GAAP operating margin and operating income of 22.4% and $155.6 million, respectively, in the comparable period of 2009.
This release contains estimates of our net income and earnings per share for the quarter ended December 31, 2010. During the year-end close process, we discovered that approximately $6.8 million in tax reserves should have been released in the quarter ended September 30, 2010. The release of these tax reserves would result in higher net income and earnings per share than previously reported for the third quarter. We are continuing to review our financial results related to the release and expect to include this adjustment in our Annual Report on Form 10-K for the year ended December 31, 2010. We do not expect this adjustment to have any impact on the reported net income and earnings per share for the full year ended December 31, 2010.
Non-GAAP results exclude the after-tax effects of amortization of intangible assets acquired with business combinations, stock-based compensation expenses, acquisition related costs, patent infringement litigation costs and expenses associated with our completed stock option investigation. A reconciliation of GAAP to non-GAAP financial results is included with this press release.
Quest Software’s management prepares and uses non-GAAP financial measures in the presentation of the Company’s results to provide a consistent understanding of its historical operating performance and comparisons with peer companies. Management believes that non-GAAP reporting provides a meaningful representation of the Company’s on-going economic performance and therefore uses non-GAAP reporting internally to evaluate and manage the Company’s operations. Management believes excluding charges such as those described above from its GAAP results facilitates investors’ understanding of the Company’s ongoing business operating results. These non-GAAP financial measures also facilitate comparisons to the operating results of the Company’s competitors and provide investors with transparency with respect to the supplemental information used by management in its operational and financial decision making. These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for measures of financial performance prepared in conformity with GAAP.
Fourth Quarter and Fiscal Year 2010 Conference Call Information
Quest Software will host a conference call today, Thursday, Feb. 3, 2011, at 2:00 p.m. Pacific Time, to discuss its results. A simultaneous webcast of the conference call will be available on Quest Software’s website in the Investor Relations section at www.quest.com/company/investor-relations.aspx . A webcast replay will be available on the same website through Feb. 3, 2012. An audio replay of the conference call will also be available through Feb. 10, 2011, by dialing (888) 203-1112 (from the U.S. or Canada) or 719-457-0820 (outside the U.S. and Canada), using confirmation code: 7524197.
This release and the matters to be discussed on the conference call may include predictions, estimates and other information that might be considered forward-looking statements, including statements relating to expectations of future revenue and operating margin performance and other operating prospects. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those anticipated as a result of various factors, including: the impact of adverse changes in general economic conditions on Quest Software’s relationships with customers, strategic partners and vendors; reductions or delays in information technology spending; variations in demand or the size and timing of customer orders; competitive conditions in Quest Software’s various product areas; rapid technological change; risks associated with the development and market acceptance of new products and product strategies; disruptions caused by acquisitions of companies and/or technologies; fluctuating currency exchange rates and risks associated with international operations; the need to attract and retain qualified employees; risks associated with Quest Software’s ongoing patent litigation; and other risks inherent in software businesses. For a discussion of these and other related risks, please refer to Quest Software’s recent SEC filings, including the Annual Report on Form 10-K for the year ended Dec. 31, 2009, which are available on the SEC's website at www.sec.gov. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Quest Software undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.
Quest Software Reports Fourth Quarter and Fiscal Year 2010 Results – page 5 of 12
Web Links Referenced in this Release:
Quest Software, Inc.: www.quest.com
Application Management: http://www.quest.com/application-monitoring/
Database Management: http://www.quest.com/database-management/
Windows Management: http://www.quest.com/windows-management/
Virtualization Management: http://www.quest.com/virtualization/
IT management: http://www.quest.com/
Facebook: http://www.facebook.com/#!/pages/Quest-Software/65026711832 LinkedIn: http://www.linkedin.com/companies/quest-software YouTube: http://www.youtube.com/user/questsoftware
Om Quest Software, Inc.
Quest Software (Nasdaq: QSFT) gör det enklare och billigare att hantera it för över 100 000
kunder över hela världen. Våra innovativa lösningar gör det lättare att lösa även de tuffaste it-
hanteringsproblem, så att kunderna kan spara tid och pengar i såväl fysiska som virtuella
miljöer och i molnet. För mer information om Quests lösningar för tillämpningshantering,
databashantering, Windows-hantering, virtualiseringshantering samt IT-hantering besök