Quest Software Reports First Quarter 2012 Results
First Quarter Revenues of $212.2 Million
Quest Software, Inc. (Nasdaq: QSFT) today reported financial results for the quarter ended Mar. 31, 2012. Total revenues were $212.2 million, a 12.8% increase compared to the prior year’s first quarter revenues of $188.2 million. Operating margin was 2.5% for the three months ended Mar. 31, 2012 as compared to 2.9% for the three months ended Mar. 31, 2011. On a non-GAAP basis, operating margin was 15.2% for the three months ended Mar. 31, 2012 as compared to 12.7% for the three months ended Mar. 31, 2011.
Cash and investments at Mar. 31, 2012, totaled $282.4 million, an increase of $28.6 million from the comparable balance at Dec. 31, 2011. Cash flow from operations was $52.2 million for the three months ended Mar. 31, 2012.
Net income attributable to Quest Software, Inc. for the first quarter of 2012 was $2.7 million, or $0.03 per fully diluted share. This compares to net income of $3.4 million, or $0.04 per share on a fully diluted basis, for the first quarter of 2011. Operating margin was 2.5% in the first quarter of 2012 compared to 2.9% in the comparable period of 2011, resulting in operating income of $5.3 million, which compares to $5.4 million for the corresponding period in 2011.
On a non-GAAP basis, net income attributable to Quest Software, Inc. for the first quarter of 2012 was $22.8 million, or $0.27 per fully diluted share. This compares to non-GAAP net income of $18.7 million, or $0.20 per share on a fully diluted basis, for the first quarter of 2011. The non-GAAP operating margin was 15.2% in the first quarter of 2012, resulting in non-GAAP operating income of $32.2 million, compared to non-GAAP operating margin and operating income of 12.7% and $23.9 million, respectively, for the corresponding period in 2011.
Non-GAAP results exclude the after-tax effects of amortization of intangible assets acquired with business combinations, stock-based compensation expenses, costs directly associated with the company’s “go private” and proposed merger transaction, adjustment of redeemable noncontrolling interest to redemption value, 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 foreign currency 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. Effective during the third quarter of 2011, we presented such unrealized foreign currency gains/losses 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 the change of presentation is not material to any periods affected. We have adjusted previously reported consolidated statements of cash flows to conform to the current year presentation.