Quest Software reports third quarter 2011 results
Third Quarter Revenues of $220.4 Million
Cash and investments at Sep. 30, 2011, totaled $256.7 million, a decrease of $24.4 million over the comparable balance at June 30, 2011. The decrease was primarily due to stock repurchases of $46.8 million during the quarter. Cash flow from operations was $23.7 million for the three months ended Sep. 30, 2011.
“Overall, this was a solid quarter for us on balance,” said Doug Garn, president and CEO of Quest Software. “Our primary focus as we close out this year is to ensure that we execute well going into 2012 and continue to deliver tangible value to our customers.”
Quest Software’s net income for the third quarter of 2011 was $21.5 million, or $0.25 per fully diluted share. This compares to net income of $28.5 million, or $0.31 per share on a fully diluted basis, for the third quarter of 2010. Operating margin was 13.6% in the third quarter of 2011 compared to 16.9% in the comparable period of 2010, resulting in operating income of $29.9 million, which compares to $32.6 million for the corresponding period in 2010. Net income for the nine months ended Sep. 30, 2011, was $31.4 million, or $0.35 per fully diluted share compared to net income of $61.5 million, or $0.66 per fully diluted share for the same period in 2010.
On a non-GAAP basis, net income for the third quarter of 2011 was $35.3 million, or $0.41 per fully diluted share. This compares to non-GAAP net income of $36.7 million, or $0.39 per share on a fully diluted basis, for the third quarter of 2010. The non-GAAP operating margin was 22.4% in the third quarter of 2011, resulting in non-GAAP operating income of $49.4 million, compared to non-GAAP operating margin and operating income of 24.5% and $47.4 million, respectively, for the corresponding period in 2010. For the nine months ended Sep. 30, 2011, non-GAAP net income was $74.9 million, or $0.83 per fully diluted share. This compares to non-GAAP net income of $90.2 million, or $0.98 per fully diluted share, for the nine months ended Sep. 30, 2010. The non-GAAP operating margin was 16.5% for the nine months ended Sep. 30, 2011, resulting in non-GAAP operating income of $101.2 million, compared to non-GAAP operating margin and operating income of 23.3% and $128.5 million, respectively, in the comparable period of 2010.
Non-GAAP results exclude the after-tax effects of amortization of intangible assets acquired with business combinations, stock-based compensation expenses, non-recurring compensation expense, acquisition related costs, retention bonus and severance costs related to the establishment of our Business Operations and Advanced Technology Center in Cork, Ireland, and patent infringement litigation costs. 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.
Change in Consolidated Statement of Cash Flows Presentation
We maintain positions in certain foreign currencies which may at times create unrealized gains or losses. Unrealized gains/losses should be presented as an adjustment to reconcile net income to net cash provided by operating activities in our consolidated statement of cash flows. This change impacts our cash flow presentation and does not impact earnings or cash balances. Management has concluded that this change of presentation is not material to any periods affected. We have adjusted previously reported statement of cash flows to conform to the current year presentation.
Third Quarter 2011 Conference Call Information
Quest Software will host a conference call today, Thursday, Nov. 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 Nov. 10, 2012. An audio replay of the conference call will also be available through Nov. 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: 3844864.
Quest Software, Inc.: www.quest.com
Quest TV: http://www.quest.com/tv/
Dell Software GmbH
Quest Software (Nasdaq: QSFT) simplifies and reduces the cost of managing IT for more than 100,000 customers worldwide. Our innovative solutions make solving the toughest IT management problems easier, enabling customers to save time and money across physical, virtual and cloud environments. For more information about Quest solutions for administration and automation, data protection, development and optimization, identity and access management, migration and consolidation, and performance monitoring, go to www.quest.com.