AMSTERDAM, April 29, 2015 /PRNewswire/ — AVG Technologies N.V. (NYSE: AVG), the provider of Internet and mobile security, privacy and optimization to 202 million active users, today reported results for the first quarter ended March 31, 2015.
- Subscription revenue grew 21 percent to $81.6 million
- Total monthly active users surpassed 200 million, with mobile users growing 29 percent over last year to 104 million
- Q1 revenues increased 10 percent over the same period last year; adjusting for foreign exchange movements, Q1 revenues grew over 12 percent
First quarter 2015 financial results
Revenue for the first quarter of 2015 was $102.8 million, compared with $93.5 million in the first quarter of 2014. Non-GAAP net income for the first quarter of 2015 was $23.9 million, or $0.46 per diluted ordinary share. This compares with non-GAAP net income of $30.0 million, or $0.56 per diluted ordinary share for the same period of the prior year1.
GAAP net income for the first quarter of 2015 was $11.9 million, or $0.22 per diluted ordinary share. This compares with net income of $17.9 million, or $0.34 per diluted ordinary share in the prior year’s first quarter.
Operating income was $19.8 million, compared with $24.7 million for the first quarter of 2014. Operating cash flow was $22.2 million for quarter, compared with $32.7 million for the first quarter last year. Non-GAAP free cash flow was $19.9 million for the quarter, compared with $30.0 million for the same period in the prior year.
“Our results of the quarter reflect the continued execution against the initiatives we laid out for you during the repositioning of the company last year,” said Gary Kovacs, CEO of AVG. “Subscription based revenue growth accelerated and now represents approximately 80 percent of the total revenues, providing an increasingly predictable, sustainable and recurring revenue base. Our total active user count has surpassed 200 million, validating our view that the online security industry is undergoing a fundamental shift, with consumers driving much of the change. As we approach the second half of 2015, we believe we will capitalize on this emerging opportunity with our strong user base and realigned focus, and continue to deliver on our objectives.”
(1) Non-GAAP results for the first quarter of 2015 exclude $3.1 million in share based compensation expense,$6.7 million in acquisition amortization and $0.3 million in charges associated with litigation settlements, $2.0 million in acquisition related charges, $0.8 million in charges related to the unwinding of discounts and changes in fair value and $0.1 million in charges associated with the rationalization of the Company’s global operations, offset against $0.9 million in net reversals of capitalized development charges, as described in the Reconciliation of GAAP measures to non-GAAP measures.
Based on information available as of April 29, 2015, AVG is reaffirming the following outlook for fiscal year 2015 as follows:
Revenue is expected to be in the range of $410 million to $430 million.
Non-GAAP adjusted net income is expected to be in the range of $94.2 million to $99.2 million; non-GAAP diluted EPS is expected to be in the range of $1.80 to $1.90.
GAAP net income is expected to be in the range of $48.9 million to $53.9 million; GAAP net income per diluted ordinary share is expected to be in the range of $0.93 to $1.03.
AVG’s expectation of non-GAAP adjusted net income for the fiscal year 2015 excludes share-based compensation expense, acquisition amortization and certain other adjustments, and assumes a normalized tax rate of 12.5%. For the purpose of calculating GAAP diluted EPS and non-GAAP diluted EPS, the Company assumes approximately 52.6 million weighted-average diluted ordinary shares outstanding for the full year.
The financial information presented in this press release is not audited or reviewed.
Conference Call Information
AVG will hold its quarterly conference call today at 5:00 p.m. ET/2:00 p.m. PT/11 PM CET to discuss its first quarter 2015 financial results, business highlights and outlook. The conference call may be accessed via webcast at http://investors.avg.com or using the following phone numbers and conference ID: +1 913 312 1499 (USAand Canada); +44 20 8150 0795 (UK); Conference ID: 1551655.
A live version and replay version of the webcast can be accessed via http://investors.avg.com.
Use of Non-GAAP Financial Information
This press release contains supplemental non-GAAP financial measures that are not calculated in accordance with U.S. GAAP. These non-GAAP measures provide additional information on the performance or liquidity of our business that we believe are useful for investors.
Adjusted net income, free cash flow and their related ratios are non-GAAP measures and should not be considered alternatives to the applicable U.S. GAAP measures. In particular, adjusted net income and free cash flow, and their related ratios, should not be considered as measurements of our financial performance or liquidity under U.S. GAAP, as alternatives to income, operating income or any other performance measures derived in accordance with U.S. GAAP or as alternatives to cash flow from operating activities as a measure of our liquidity.
Adjusted net income and free cash flow are measures of financial performance and liquidity, respectively, and have limitations as analytical tools, and should not be considered in isolation from, or as substitutes for, analysis of our results of operations, including our operating income and cash flows, as reported under U.S. GAAP. We provide these non-GAAP financial measures because we believe that such measures provide important supplemental information to management and investors about the Company’s core operating results and liquidity, primarily because the non-GAAP financial measures exclude certain expenses and other amounts that management does not consider to be indicative of the Company’s core operating results or business outlook or liquidity. Management uses these non-GAAP financial measures, in addition to the corresponding U.S. GAAP financial measures, in evaluating the Company’s operating performance, in planning and forecasting future periods, in making decisions regarding business operations and allocation of resources, and in comparing the Company’s performance against its historical performance. Some of the limitations of adjusted net income and free cash flow and their related ratios as measures are:
they do not reflect our cash expenditure or future requirements for capital expenditure or contractual commitments, nor do they reflect the actual cash contributions received from customers;
they do not reflect changes in, or cash requirements for, our working capital needs;
although amortization and share-based compensation are non-cash charges, the assets being amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and
other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures
Because of these limitations, investors should rely on AVG’s consolidated financial statements prepared in accordance with U.S. GAAP and treat the Company’s non-GAAP financial measures as supplemental information only.
For a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with U.S. GAAP, please see “Reconciliation of GAAP to non-GAAP financial measures”. All non-GAAP financial measures should be read in conjunction with the comparable information presented in accordance with U.S. GAAP.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including those relating to an expected range of revenue, net income, EPS, non-GAAP adjusted net income and non-GAAP EPS for the fiscal year ending December 31, 2015 and/or future periods, as well as those relating to the future prospects of AVG. Words such as “expects,” “expectation,” “intends,” “assumes,” “believes” and “estimates,” variations of such words and similar expressions are also intended to identify forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated herein. Factors that could cause or contribute to such differences include but are not limited to: changes in our growth strategies; changes in our future prospects, business development, results of operations and financial condition; the anticipated costs and benefits of our Location Labs acquisition and other acquisitions; our ability to remediate the material weaknesses and other deficiencies identified in our internal controls or IT systems; our ability to comply with our credit agreements; changes to the online and computer threat environment and the endpoint security industry; competition from local and international companies, new entrants in the market and changes to the competitive landscape; the adoption of new, or changes to existing, laws and regulations; changes in international or national tax regulations and related proposals; the assumptions underlying the calculation of our key metrics, including the number of our active users, revenue per average active user, subscription revenue per subscriber and platform-derived revenue per thousand searches; potential effects of changes in the applicable search guidelines of our search partners; the status of or changes to our relationships with our partners, including Yahoo!, Googleand other third parties; changes in our and our partners’ responses to privacy concerns; our ability to successfully exit the third party search distribution business; our plans to launch new products and online services and monetize our full user base; the performance of our products, including AVG Zen; our ability to attract and retain active and subscription users; our ability to retain key personnel and attract new talent; our ability to adequately protect our intellectual property; our geographic expansion plans; the outcome of ongoing or any future litigation or arbitration, including litigation or arbitration relating to intellectual property rights; our legal and regulatory compliance efforts, including with respect to PCI compliance; and worldwide economic conditions and their impact on demand for our products and services. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements.
Further information on these factors and other risks that may affect the Company’s business is included in filings AVG makes with the U.S. Securities and Exchange Commission (SEC) from time to time, including its Annual Report on Form 20-F, particularly under the heading “Risk Factors”.
The financial information contained in this press release should be read in conjunction with the consolidated financial statements and notes thereto to be included in the Company’s reports on Form 6-K and Form 20-F. The Company’s results of operations for the first quarter, ended March 31, 2015 are not necessarily indicative of the Company’s operating results for any future periods.
These documents are available online from the SEC or in the Investor Relations section of the Company’s website at http://investors.avg.com. Information on the AVG website is not part of this release. All forward-looking statements in this press release are based on information currently available to the Company, and AVG assumes no obligation to update these forward-looking statements in light of new information or future events.
AVG is the online security company providing simple, integrated software and services to secure devices, data and people. Over 200 million active users and businesses use AVG’s products and services worldwide.
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April 30, 2015