Attunity Reports Record Third Quarter 2018 Results; 50% License Growth

BURLINGTON, Massachusetts, Nov.1, 2018 /PRNewswire/ --

Attunity Ltd. (NasdaqCM: ATTU), a leading provider of data integration and big data management software solutions, today reported its unaudited financial results for the three-month period ended September 30, 2018.

"The third quarter of 2018 was another great quarter for Attunity. We are pleased to report strong performance including license revenue growth of 50% year-over-year and total revenue growth of 35% year-over-year, as well as increased profits and cash flow from operations," stated Shimon Alon, Chairman and CEO of Attunity.

"Our record performance comes from a healthy mix of new customer deals, existing customer expansion, growth across all territories, our expanded product suite and contribution from new and existing partners. With positive momentum across our entire business and three strong quarters behind us this year, we determined to raise our guidance for the full year," concluded Mr. Alon.

Recent Operational Highlights

    --  Number of term-based license deals grew by 40% sequentially, with over
        60% of the number of Replicate direct license deals being term-based
    --  Closed $1.0 million deal with existing multi-million dollar customer in
        the manufacturing industry, expanding their initial deployment by adding
        more sources, more capacity, and licensing more products
    --  Closed $1.0 million term-based deal with new customer in the education
        sector
    --  Expanded Attunity Data Integration platform to include comprehensive
        support for Google Cloud Platform
    --  Achieved SAP-certified integration with SAP HANA® for Attunity
        Replicate

Financial Highlights for the Third Quarter of 2018 compared with the Third Quarter of 2017

    --  Total revenue was $22.2 million, compared with $16.5 million*
    --  Operating profit was $3.5 million, compared with $0.1 million*
    --  Non-GAAP operating profit was $4.8 million, compared with $1.5 million**
    --  Net income was $3.1 million, compared with a net loss of $0.4 million*
    --  Non-GAAP net income was $4.5 million, compared with non-GAAP net income
        of $0.8 million**
    --  Cash flow from operations was $2.5 million, compared with cash used in
        operations of $2.8 million

Financial Results for Third Quarter of 2018

Total revenue for the third quarter of 2018 increased 35% to $22.2 million, compared with $16.5 million for the same period in 2017. This includes license revenue of $13.8 million, which grew 50% compared with $9.2 million for the same period in 2017, and maintenance and service revenue, which grew 16% to $8.4 million, compared with $7.3 million for the same period in 2017. License revenue includes approximately $2.7 million, recognized from a previously announced strategic OEM licensing agreement with a top information technology company.*

Operating expenses for the third quarter of 2018 increased 14% to $18.7 million, compared with $16.4 million for the same period in 2017.*

Non-GAAP operating expenses for the third quarter of 2018 increased 16% to $17.4 million, compared with $15.0 million for the same period in 2017. Non-GAAP operating expenses exclude approximately $1.3 million in equity-based compensation expenses and amortization associated with acquisitions, similar to the same period in 2017.**

Operating profit for the third quarter of 2018 was $3.5 million, compared with $0.1 million for the same period in 2017.*

Non-GAAP operating profit was $4.8 million for the third quarter of 2018, compared with $1.5 million for the same period in 2017. Non-GAAP operating profit excludes approximately $1.3 million in equity-based compensation expenses and amortization associated with acquisitions, similar to the same period in 2017.**

Net income for the third quarter of 2018 was $3.1 million, or $0.14 per diluted share, compared with a net loss of $0.4 million, or ($0.03) per diluted share, in the same period in 2017.*

Non-GAAP net income for the third quarter of 2018 was $4.5 million, or $0.20 per diluted share, compared with $0.8 million, or $0.04 per diluted share, for the same period in 2017. Non-GAAP net income excludes approximately $1.4 million primarily in equity-based compensation expenses and amortization associated with acquisitions, compared with approximately $1.2 million of similar expenses for the same period in 2017.**

Cash flow from operations in the third quarter of 2018 was $2.5 million, compared with cash used in operations of $2.8 million in the same period in 2017.

Cash and cash equivalents and short-term deposits were $38.1 million as of September 30, 2018, compared with $33.1 million as of June 30, 2018.

Updated Outlook for Full Year 2018

The Company increased its outlook for the full year 2018 as follows:

    --  Total revenue is estimated to grow to between $83 and $85 million,
        compared with prior (updated) guidance of $78 to $81 million.
    --  Non-GAAP operating margin is estimated to be between 13% and 15%,
        compared with prior (updated) guidance of 7% to 10%.

Financial Reconciliation to non-GAAP figures for the updated 2018 outlook:


                                         
     From    
     To



        GAAP Operating Profit Margin            7%       9%

    ---


       Equity-based compensation             (5%)     (5%)

    ---

        Amortization associated with
         acquisitions                         (1%)     (1%)

    ---

        Non-GAAP Operating Profit Margin
         (1)                                  13%      15%

    ---

(1) Non-GAAP Operating Profit Margin is calculated by dividing the non-GAAP Operating Profit by the total non-GAAP revenues for the period.

These estimates for 2018 reflect the Company's current and preliminary views, which are subject to change (see below under "Safe Harbor Statement") and are based on various assumptions, including the continued expanded adoption of the Cloud as a leading data platform, the continued adoption of modern analytics and the improved execution capabilities of our expanded sales team.

** See "Use of Non-GAAP Financial Information" below for more information regarding Attunity's use of Non-GAAP financial measures.

Conference Call and Webcast Information

The Company will host a conference call with the investment community on Thursday, November 1(st) at 8:30 a.m. Eastern Time featuring remarks by Shimon Alon, Chairman and CEO,

Dror Harel-Elkayam, CFO, and Itamar Ankorion, CMO of Attunity. The dial-in numbers for the conference call are +1-877-407-9039 (U.S. Toll Free), +1-809-406-247 (Israel), or +1-201-689-8470 (International). All dial-in participants must use the following code to access the call: 13683765.

Please call at least five minutes before the scheduled start time. The conference call will also be available via webcast, which can be accessed through the Investor Relations section of Attunity's website, ir.attunity.com. Please allow extra time prior to the call to visit the site and download any necessary software to listen to the live broadcast.

For interested individuals unable to join the conference call, a replay of the call will be available through November 15, 2018, at +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671 (International). Participants must use the following code to access the replay of the call: 13683765. The online archive of the webcast will be available on ir.attunity.com/events-and-presentations for 30 days following the call.

About Attunity

Attunity is a leading provider of data integration and big data management software solutions that enable availability, delivery and management of data across heterogeneous enterprise platforms, organizations and the cloud. Our software solutions include data replication and distribution, test data management, change data capture (CDC), data connectivity, enterprise file replication (EFR), managed file transfer (MFT), data warehouse automation, data usage analytics and cloud data delivery.

Attunity has supplied innovative software solutions to its enterprise-class customers for over 20 years and has successful deployments at thousands of organizations worldwide. Attunity provides software directly and indirectly through a number of partners such as Microsoft, Oracle, IBM and Hewlett Packard Enterprise. Headquartered in Boston, Attunity serves its customers via offices in North America, Europe, and Asia Pacific and through a network of local partners. For more information, visit www.attunity.com or our blog and join our community on Twitter, Facebook, LinkedIn and YouTube.

(*) New Revenue Accounting Standard

Effective January 1, 2018, Attunity adopted the FASB-issued ASU, No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", or ASC 606, a new accounting standard related to revenue recognition. Attunity adopted ASC 606 using the modified retrospective method, which means that the comparative financial information for the three and nine month periods ended September 30, 2017 has not been restated in the current financial statements under the new accounting standard. Accordingly, the percentage changes from the 2017 to 2018 periods differ from what they would have been had the same accounting standards been in effect for both periods. In the interest of comparability during the transition year to ASC 606, the company has provided revenue, operating expenses, operating income (loss), financial income, taxes on income, net income (loss) and earnings per share information in accordance with both ASC 606 and revenue recognition rules in effect prior to the adoption of ASC 606 (ASC No. 985-605, or ASC 605). For further details, see the Impact of the Adoption of ASC 606 table later in this press release and the note thereto.

(**) Use of Non-GAAP Financial Information

In addition to reporting financial results in accordance with U.S. generally accepted accounting principles, or GAAP, Attunity uses Non-GAAP measures of net income (loss), operating expenses, operating profit (loss), and diluted net income (loss) per share, which are adjusted from results based on GAAP to exclude amortization associated with acquisitions, equity-based compensation expenses, non-cash financial expenses, such as the effect of a revaluation of liabilities presented at fair value, and the effect of changes in deferred taxes related to non-GAAP adjustments. Attunity's management believes the non-GAAP financial information provided in this release is useful to investors' understanding and assessment of Attunity's on-going core operations and prospects for the future. Management uses both GAAP and non-GAAP information in evaluating and operating its business internally and as such has determined that it is important to provide this information to investors. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. For further details, see the Reconciliation of Supplemental Non-GAAP Financial Information table later in this press release.

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Statements preceded by, followed by, or that otherwise include the words "believes", "expects", "anticipates", "intends", "estimates", "plans", and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. For example, when we discuss the momentum across our entire business, the continued trend of demand for our recurring revenue pricing model and our updated outlook for 2018, we are using forward-looking statements. In addition, announced results for the third quarter of 2018 are preliminary, unaudited and subject to year-end audit adjustment. Because such statements deal with future events, they are subject to various risks and uncertainties and actual results, expressed or implied by such forward-looking statements, could differ materially from Attunity's current expectations. Factors that could cause or contribute to such differences include, but are not limited to, risks and uncertainties relating to: our history of operating losses and ability to sustain profitability; our business and operating results dependency on the successful and timely implementation of our third party partner solutions; the lengthy sales cycle of our products; competition; acquisitions, including costs and difficulties related to integration of acquired businesses and impairment charges; global economic conditions; timely availability and customer acceptance of Attunity's new and existing products; risks relating to proprietary rights and risks of infringement; the potential loss of one or more of our significant customers or a decline in demand from one or more of these customers; our ability to retain and attract qualified personnel; and other factors and risks on which Attunity may have little or no control. This list is intended to identify only certain of the principal factors that could cause actual results to differ. For a more detailed description of the risks and uncertainties affecting Attunity, reference is made to Attunity's latest Annual Report on Form 20-F which is on file with the Securities and Exchange Commission (SEC) and the other risk factors discussed from time to time by Attunity in reports filed with, or furnished to, the SEC. Except as otherwise required by law, Attunity undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

The contents of any website or hyperlinks mentioned in this press release are for informational purposes and the contents thereof are not part of this press release.

©Attunity 2018. All Rights Reserved. Attunity is a registered trademark of Attunity Inc. All other product and company names herein may be trademarks of their respective owners.

For more information, please contact::

Investor Contact::
Todd Fromer / Allison Soss
KCSA Strategic Communications
Tel. +1-212-896-1267
Attunity@kcsa.com

Company Contact::
Dror Harel-Elkayam, CFO
Attunity Ltd.
Tel. +972-9-899-3000
Dror.elkayam@attunity.com


                                          
         
          CONDENSED CONSOLIDATED BALANCE SHEETS


                                            
         
              U.S. dollars in thousands




                                                     September                               December
                                                           30,                                     31,


                                                                             2018                           2017



                                        
         
         Unaudited                                Audited




              ASSETS




               CURRENT ASSETS:


               Cash and cash
                equivalents                                      $
              14,329                    $
       29,087


               Short term deposits                                         23,768


               Trade receivables (net of
                allowance for doubtful
                accounts of $15                                            14,347                         10,609
    at September 30, 2018 and
     December 31, 2017)


               Deferred commissions
                costs                                                       1,354


               Other accounts receivable
                and prepaid expenses                                        2,415                          1,074



               Total current assets                                        56,213                         40,770





               LONG-TERM ASSETS:



              Other assets                                                   183                          1,361


               Deferred commissions
                costs                                                       5,080


               Severance pay fund                                           4,618                          4,378


               Property and equipment,
                net                                                         1,427                          1,287


               Goodwill and other
                intangible assets, net                                     31,653                         32,360


               Total long-term assets                                      42,961                         39,386





               Total assets                                      $
              99,174                    $
       80,156


                                              
      
               CONDENSED CONSOLIDATED BALANCE SHEETS


                                    
              
       U.S. dollars in thousands, except share and per share data




                                                                September                                                December
                                                                      30,                                                          31,


                                                                     2018                                           2017



                                                                Unaudited                        
              
       Audited



               LIABILITIES AND SHAREHOLDERS'
                EQUITY




               CURRENT LIABILITIES:





              Trade payables                                                  $
              871                               $
          666



              Deferred revenues                                   13,045                                         11,066


               Employees and payroll accruals                       6,068                                          5,730


               Accrued expenses and other
                current liabilities                                 1,785                                          3,066




               Total current liabilities                           21,769                                         20,528




               LONG-TERM LIABILITIES:



              Other liabilities                                      704                                            321



              Deferred revenues                                    3,277                                          2,163


               Accrued severance pay                                6,157                                          5,941




               Total long-term liabilities                         10,138                                          8,425




               SHAREHOLDERS' EQUITY:


               Share capital - Ordinary
                shares of NIS 0.4 par value -
                Authorized:                                         2,430                                          2,361
    32,500,000 shares at September
     30, 2018 and December 31,
     2017 ;
    Issued and outstanding:
     21,336,852 shares at
     September 30, 2018
    and 20,718,468 shares at
     December 31, 2017


               Additional paid-in capital                         180,673                                        174,693


               Accumulated other
                comprehensive loss                                (1,377)                                       (1,222)



              Accumulated deficit                              (114,459)                                     (124,629)




               Total shareholders' equity                          67,267                                         51,203


               Total liabilities and
                shareholders' equity                                        $
              99,174                            $
          80,156


                                                  
       
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                                            
           
       U.S. dollars and shares in thousands, except per share data




                                                                                                    Three months ended                            Nine months ended


                                                                                                 September 30,                            September 30,



                                                                                       2018                              2017            2018                          2017



                                                                                                 Unaudited                            Unaudited




              Revenues:



              Software licenses                                           $
              13,772                  $
             9,189 $
           35,396            $
              22,353



              Maintenance and services                                               8,448                             7,290          24,872                        21,470



              Total revenues                                                        22,220                            16,479          60,268                        43,823



              Operating expenses:



              Cost of revenues                                                       2,527                             2,703           7,933                         7,228



              Research and development                                               4,091                             3,674          12,022                        10,473



              Selling and marketing                                                 10,437                             8,527          30,514                        25,182



              General and administrative                                             1,636                             1,464           4,601                         3,965



              Total operating expenses                                              18,691                            16,368          55,070                        46,848





              Operating profit (loss)                                                3,529                               111           5,198                       (3,025)





              Financial income (expenses), net                                         122                                20             208                          (37)





              Income (loss) before taxes on                                          3,651                               131           5,406                       (3,062)
    income





              Taxes on income                                                        (566)                            (559)        (1,863)                      (2,031)





              Net profit (loss)                                            $
              3,085                  $
             (428) $
           3,543           $
              (5,093)






              Basic net income (loss) per share                             $
              0.15                 $
             (0.03)  $
           0.17            $
              (0.30)




              Weighted average number of                                            21,214                            17,090          20,979                        17,060
    shares used in computing
    basic net income (loss) per share




              Diluted net income (loss) per share                           $
              0.14                 $
             (0.03)  $
           0.16            $
              (0.30)




              Weighted average number of                                            22,406                            17,090          21,589                        17,060
    shares used in computing
    diluted net income (loss) per share


                               
              
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


                                          
              
                U.S. dollars in thousands




                                                                                                       Nine months ended
                                                                                                          September 30,



                                                                                               2018                            2017



                                                                                                       Unaudited



                            Operating activities:

    ---

               Net profit (loss)                                                    $
              3,543                 $
          (5,093)


               Adjustments required to reconcile net profit (loss)
    to net cash provided by (used in) operating
     activities:



              Depreciation                                                                     405                             363


               Stock based compensation                                                       3,039                           2,654


               Amortization of intangible
                assets                                                                          707                           1,010


               Accrued interest on short
                term deposits                                                                 (268)



              Change in:


                  Accrued severance pay, net                                                   (24)                            289


                  Trade receivables                                                         (1,526)                        (1,472)


                  Other accounts receivable and
                   prepaid expenses                                                         (1,379)                          (596)


                  Other long-term assets                                                         43                             394



                 Trade payables                                                                213                             555


                  Deferred revenues                                                           3,809                             783


                  Employees and payroll
                   accruals                                                                     329                           (309)


                  Accrued expenses and other
                   liabilities                                                                (528)                           (15)


                  Deferred commissions costs                                                (1,960)


               Liabilities presented at fair
                value                                                                                        (212)


               Net cash provided by (used
                in) operating activities                                                      6,403                         (1,649)





                            Investing activities:

    ---

               Short term deposits                                                         (23,500)


               Purchase of property and
                equipment                                                                     (547)                          (409)


               Net cash used in investing
                activities                                                                 (24,047)                          (409)





                            Financing activities:

    ---

               Proceeds from exercise of
                options                                                                       3,008                             421


               Payment of contingent
                consideration                                                                                (271)


               Net cash provided by
                financing activities                                                          3,008                             150



               Foreign currency translation
                adjustments on cash                                                           (122)                             35
    and cash equivalents





               Decrease in cash and cash
                equivalents                                                                (14,758)                        (1,873)


               Cash and cash equivalents at
                the beginning of the                                                         29,087                           9,166
    year





               Cash and cash
                equivalents at the
                end of the period                                                  $
              14,329                   $
          7,293





                            Supplemental disclosure of
                             cash flow activities:

    ---

               Cash paid during
                the year for taxes                                                  $
              3,053                   $
          1,619


                            Supplemental disclosure of
                             non-cash financing
    activities:

    ---

               Receivables on
                account of shares                                                     $
              240  
              $


                                                 
              
           RECONCILIATION OF SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION


                                                       
              
           U.S. dollars  in thousands, except per share data




                                                                                                                                  Three months ended                    Nine months ended


                                                                                                                                  September 30,                    September 30,

                                                                                                                                                     ---

                                                                                                                  2018                     2017           2018            2017

                                                                                                                                                                        ---

                                                                                                                                  Unaudited                    Unaudited

                                                                                                                                                     ---




              GAAP and Non-GAAP revenues                                                                      $22,220                  $16,479        $60,268         $43,823



              GAAP operating expenses                                                                          18,691                   16,368         55,070          46,848



              Cost of revenues (1)                                                                               (50)                    (51)         (151)          (115)



              Research and development (1)                                                                      (138)                   (213)         (473)          (578)



              Sales and marketing (1)                                                                           (637)                   (497)       (1,734)        (1,279)



              General and administrative (1)                                                                    (226)                   (243)         (681)          (682)



              Amortization of acquired intangible assets                                                        (236)                   (337)         (707)        (1,010)




              Non-GAAP operating expenses                                                                      17,404                   15,027         51,324          43,184





              GAAP operating income (loss)                                                                      3,529                      111          5,198         (3,025)



              Operating adjustments                                                                           (1,287)                 (1,341)       (3,746)        (3,664)

                                                                                                                                                                        ---


              Non-GAAP operating income                                                                         4,816                    1,452          8,944             639





              GAAP financial income (expenses), net                                                               122                       20            208            (37)



              Revaluation of liabilities presented at fair value                                                                                                     (212)




              Non -GAAP financial  income (expenses), net                                                         122                       20            208           (249)





              Taxes on income                                                                                   (566)                   (559)       (1,863)        (2,031)



              Income taxes (tax benefits) related to non-GAAP                                                     156                    (161)           402              22
    adjustments

                                                                                                                                                                        ---


              Non-GAAP taxes on income                                                                          (410)                   (720)       (1,461)        (2,009)





              GAAP net income (loss)                                                                            3,085                    (428)         3,543         (5,093)



              Amortization of acquired intangible assets                                                          236                      337            707           1,010



              Stock-based compensation (1)                                                                      1,051                    1,004          3,039           2,654



              Revaluation of liabilities presented at fair value                                                                                                     (212)



              Income taxes (tax benefits) related to non-GAAP                                                     156                    (161)           402              22
    adjustments

                                                                                                                                                                        ---


              Non-GAAP net income (loss)                                                                       $4,528                     $752         $7,691        $(1,619)






              Non-GAAP basic net income (loss) per share                                                        $0.21                    $0.04          $0.37         $(0.09)




              Non-GAAP diluted net income (loss) per share                                                      $0.20                    $0.04          $0.35         $(0.09)



     (1) Stock-based compensation expenses:


                                             Three months ended Nine months ended


                                                September 30,     September 30,



                                                           2018               2017   2018   2017




     Cost of revenues                                      $50                $51   $151   $115



     Research and development                              138                213    473    578



     Sales and marketing                                   637                497  1,734  1,279



     General and administrative                            226                243    681    682



                                                         $1,051             $1,004 $3,039 $2,654


                                                                               
            
                IMPACT OF THE ADOPTION OF ASC 606


                                                                             
       
                U.S. dollars in thousands, except per share data




                                    Three months ended September 30, 2018                                                Nine months ended September 30, 2018

                                  
     
                (Unaudited)                                                  
              
                (Unaudited)

                                                                                                                                                          ---

                                                                                                                                      ASC 605                             As reported   
      
     Adjustments                     ASC 605
                                                                                                                        (excluding                              (ASC 606)                                       (excluding
                                                 As reported              
     
         Adjustments
                                       (ASC 606)                                                                                       impact of                                                                             impact of

                                                                                                                                    ASC 606) *                                                                             ASC 606) *

                                                                                                                                                                                                                                    ---


              Revenues                                           $22,220              $(2,951)                                                        $19,269                    $60,268             $(9,765)                     $50,503



              Operating expenses                                  18,691                   706                                                          19,397                     55,070                1,960                       57,030




              Operating income                                     3,529               (3,657)                                                          (128)                     5,198             (11,725)                     (6,527)
    (loss)



              Financial income                                       122                                                                                  122                        208                                              208



              Taxes on income                                      (566)                   96                                                           (470)                   (1,863)                 296                      (1,567)




              Net income (loss)                                   $3,085              $(3,561)                                                         $(476)                    $3,543            $(11,429)                    $(7,886)

                                                                                                                                                                                                                                    ===




              Basic  net income                                    $0.15               $(0.17)                                                        $(0.02)                     $0.17              $(0.54)                     $(0.37)
    (loss) per share

                                                                                                                                                                                                                                    ===


              Diluted net income                                   $0.14               $(0.16)                                                        $(0.02)                     $0.16              $(0.53)                     $(0.37)
    (loss) per share

                                                                                                                                                                                                                                    ===

(*) Effective January 1, 2018, the Company adopted the Financial Accounting Standard Board-issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", or ASC 606, a new accounting standard related to revenue recognition, using the modified retrospective method. In order to provide comparable figures during 2018, the transition year to ASC 606, the Company has provided the above summary of adjustments in financial information for the three and the nine months ended September 30, 2018 in accordance with both ASC 606 and previous accounting literature, ASC No. 985-605, or ASC 605. The table above also shows the adjustments made to reconcile the ASC 606 presentation to ASC 605. The ASC 605 information should be considered in addition to, not as a substitute for, nor superior to or in isolation from, the financial information prepared and reported in accordance with ASC 606.

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SOURCE Attunity Ltd.