Avid Announces Fourth Quarter and Full Year Financial Results, Financial Guidance for First Quarter and Full Year 2016 and Longer Term Financial Guidance for 2017 and 2018

Bookings, Revenue and Adjusted EBITDA All Increased in the Fourth Quarter

Avid Everywhere Momentum Continues

Company Transformation on Track for Mid-2017 Completion

BURLINGTON, Mass., March 15, 2016 (GLOBE NEWSWIRE) -- Avid® (Nasdaq:AVID) announced today that it has released fourth quarter and full year 2015 results and provided financial guidance for both full year and first quarter 2016. Additionally, Avid has shared financial guidance on a longer term basis for 2017 and 2018.

Fourth Quarter Highlights

Bookings grew by 26% over Q4 2014 to $193 million in the fourth quarter
Non-GAAP revenue grew by 9% over Q4 2014 to $140 million in the fourth quarter
Adjusted EBITDA of $17.0 million improved by 19% over Q4 2014
Generated adjusted free cash flow of $2.3 million, up from a use of $10.6 million in Q3 2015

Avid Everywhere Momentum Continues

Over 32,000 users on the MediaCentral platform as of the end of 2015, a 54% increase over the end of 2014
- Added over 4,000 MediaCentral platform users in Q4, representing a 15% increase from the end of Q3 2015
Over 25,000 paying subscribers as of the end of 2015, an increase of over 400% since the beginning of the year
- Added over 7,500 paying subscribers in Q4, representing a 43% increase from the end of Q3 2015
Post-2010 revenue backlog increased to $526 million as of December 31, 2015, up 16% from the end of 2014
Bookings attributable to recurring revenue, or recurring revenue bookings, represented approximately 38% of total 2015 bookings up from 26% in 2014
- Q4 2015 Recurring revenue bookings were 55% of total 2015 bookings up from 42% in Q4 2014
Non-GAAP operating expense declined by approximately 4% annually after normalizing for impact of the Orad acquisition (increased 0.7% on an as reported basis, which includes Orad)

Transformation on Track for Expected Mid-2017 Completion
Despite the continued negative impact of the pre-2011 revenue amortization run-off, which will provide approximately $33 million less revenue and adjusted EBITDA in 2016, the Company believes its momentum and platform strategy should enable improved growth rates in the key financial focus areas of adjusted EBITDA and adjusted free cash flow.

Anticipated 2016 annual adjusted EBITDA growth of 9% - 36%
Anticipated 2016 annual adjusted free cash flow improvement of $37 to $47 million
Improved post-transformation financial model with accelerating growth of Adjusted EBITDA and adjusted free cash flow in 2017 and 2018

“We’re encouraged by the strong finish to 2015 as reflected by growth in many key metrics. The continued momentum of the Avid MediaCentral Platform and Avid Everywhere demonstrates that the market is embracing our strategy. Punctuated by the largest transaction in our history with Sinclair Broadcast Group, the world’s largest and most sophisticated media companies are adopting our strategy. We are only now beginning to fully leverage the power of the platform and realize the associated financial benefits.” said Louis Hernandez, Jr, Chairman, President, and CEO of Avid. “2016 will be marked by specific platform-enabled growth and efficiency initiatives, which will demonstrate our ability to generate a meaningful financial return for our shareholders.”

The Company’s guidance demonstrates the MediaCentral Platform’s ability to drive higher growth and increase lifetime customer value while driving operational efficiency for both Avid and its customers. The key platform-enabled growth strategies for 2016 include:

Continue to drive MediaCentral platform adoption
Grow wallet share with existing customers
- New internally developed and 3^rd party applications through our Alliance partnership program, made possible by the connectivity and openness of the Platform
- Cross & up-sell existing and new workflow products and services, including Orad graphic and live production solutions, to increase wallet share among existing customers
More powerfully leverage our recently enhanced global reseller network to efficiently deliver the right products and services to more customers
Expand customer ecosystem by accessing partners’ customer bases with our complementary products and solutions

“Avid is in the final stretches of its dramatic transformation and the benefits of Avid’s Platform approach to solving the media industry’s more pressing needs is reflected in both a solid close to 2015 and dramatically improved financial expectations for 2016 and beyond” said Mr. Hernandez. “We are on track to complete the transformation and position Avid for long term sustainable and profitable growth with an improved financial model.”

Avid’s 2016 full year and first quarter financial guidance, as well as its longer term 2017 and 2018 guidance are set forth in the tables below. A highlight of our guidance is the anticipated material increase in adjusted EBITDA and adjusted free cash flow on an annual basis and through 2018. Specifically, we anticipate annual adjusted EBITDA growth of 9% to 36% and improvement in annual adjusted free cash flow of $37 to $47 million. The anticipated increases in adjusted EBITDA and adjusted free cash flow reflect what we believe is the power of the MediaCentral platform, as well as reflecting a full year of Orad operating results. Avid’s investments are converting into new growth initiatives and incremental cost efficiencies to achieve a leaner and more directed cost structure, which are reflected in the guidance through 2018. The first quarter 2016 guidance reflects normal cash flow seasonality and incorporates partial realization of the cost efficiency program. The announced growth initiatives are expected to have a more pronounced positive financial impact in the second half of 2016 and the full impact is reflected in the 2017 and 2018 guidance.

2016 Full Year & Q1 Guidance

(in $ millions)	Full Year	Q1 2016
Bookings (Constant Currency)	$530-$566	$108-$118
Bookings	$500-$536	$100-$112
Non-GAAP Revenue	$500-$525	$120-$125
Adjusted EBITDA	$60-$75	$11-$14
Adjusted Free Cash Flow	$2-$12	($15)-($9)
Non-GAAP Gross Margin	59.5%-60.5%	60-61%
Adjusted Operating Expenses	$250-$262	$64-$66

2017 and 2018 Longer Term Guidance

(in $ millions)		2017	2018
Bookings	$515-$552		$530-$569
Non-GAAP Revenue	$515-$542		$530-$560
Adjusted EBITDA	$80-$95		$90-$105
Adjusted Free Cash Flow	$25-$40		$40-$60

“The Company’s 2015 financial performance reflects our focus on executing our strategic initiatives, including building the foundation to shift to a leaner, more directed cost structure and increasing the level of recurring revenue,” said John Frederick, Chief Financial and Administrative Officer of Avid. “Moving into 2016 and beyond, we expect to see material improvement in free cash flow generation and Adjusted EBITDA as our work begins to more visibly convert to an attractive financial model.”

Guidance and Financial and Operational Metrics

All guidance presented by the Company is inherently uncertain and subject to numerous risks and uncertainties. Our actual future results of operations and cash flows could differ materially from those shown in the table above. For a discussion of some of the key assumptions underlying the guidance, as well as the key risks and uncertainties associated with these forward-looking statements, please see “Forward Looking Statements” below as well as the Avid Technology Q4 2015 Business Update presentation posted on Avid’s investor relations website.

Avid includes non-GAAP financial measures in this press release, including non-GAAP revenue, adjusted EBITDA, adjusted free cash flow, non-GAAP operating income (loss), non-GAAP operating income (loss) per share, adjusted operating expenses and non-GAAP gross margin. The Company also includes the operational metric of bookings, revenue backlog and recurring revenue bookings in this release. Avid believes the non-GAAP financial measures and operational metrics provided in this release provide helpful information to investors with respect to evaluating the Company’s performance. Unless noted, all financial information is reported based on actual exchange rates. Definitions of the non-GAAP financial measures are included in our Form 8-K filed today. Reconciliations of the non-GAAP financial measures in this release to the Company's comparable GAAP financial measures for the periods presented are set forth below and are also included in the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com, which also includes definitions of the operational metrics.

Conference Call

A conference call to discuss Avid's financial results for the fourth quarter and full year of 2015 will be held on Tuesday, March 15, 2016 at 5:00 p.m. ET. The call will be open to the public and can be accessed by dialing 719-325-2463 and referencing confirmation code 4563906. You may also listen to the call on the Avid Investor Relations website. To listen via the website, go to the events tab at ir.avid.com for complete details prior to the start of the conference call. A replay of the call will also be available on the Avid Investor Relations website shortly after the completion of the call.

Forward-Looking Statements

Certain information provided in this press release, including the tables attached hereto, include forward-looking statements that involve risks and uncertainties, including projections and statements about our anticipated plans, objectives, expectations and intentions. Among other things, this press release includes estimated results of operations for 2016, 2017 and 2018, which estimates are based on a variety of assumptions about key factors and metrics that will determine our future results of operations, including, for example, overall market growth rates in the range of 3.0-3.3%, realization of identified efficiency programs and market based cost inflation. Other forward-looking statements include, without limitation, statements based upon or otherwise incorporating judgments or estimates relating to future performance such as future operating results and expenses; earnings; bookings; backlog; revenue backlog conversion rate; product mix and free cash flow; our long-term and recent cost savings initiatives and the anticipated benefits therefrom; our future strategy and business plans; our product plans, including products under development, such as cloud and subscription based offerings; our liquidity and ability to raise capital; the anticipated benefits of the Orad acquisition, including estimated synergies, including effects on future financial and operating results; and our liquidity. The projected future results of operations, and the other forward-looking statements in this release are based on current expectations as of the date of this release and subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including but not limited to the effect on our sales, operations and financial performance resulting from: our liquidity; our ability to execute our strategic plan, including cost savings initiatives, and meet customer needs; our ability to retain and hire key personnel; our ability to produce innovative products in response to changing market demand, particularly in the media industry; our ability to successfully accomplish our product development plans; competitive factors; history of losses; fluctuations in our revenue, based on, among other things, our performance and risks in particular geographies or markets; our higher indebtedness and ability to service it and meet the obligations thereunder; restrictions in our credit facilities; our move to a subscription model and related effect on our revenues and ability to predict future revenues; elongated sales cycles; fluctuations in foreign currency exchange rates; seasonal factors; adverse changes in economic conditions; variances in our revenue backlog and the realization thereof; the identified material weaknesses in our internal control over financial reporting; and the possibility of legal proceedings adverse to our company. Moreover, the business may be adversely affected by future legislative, regulatory or changes, including tax law changes, as well as other economic, business and/or competitive factors. The risks included above are not exhaustive. Other factors that could adversely affect our business and prospects are set forth in our public filings with the SEC. Forward-looking statements contained herein are made only as to the date of this press release and we undertake no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

About Avid

Through Avid Everywhere™, Avid delivers the industry's most open, innovative and comprehensive media platform connecting content creation with collaboration, asset protection, distribution and consumption. Media organizations and creative professionals use Avid solutions to create the most listened to, most watched and most loved media in the world—from the most prestigious and award-winning feature films, to the most popular television shows, news programs and televised sporting events, as well as a majority of today’s most celebrated music recordings and live concerts. Industry leading solutions include Pro Tools®, Media Composer®, ISIS®, Interplay®, ProSet and RealSet, Maestro, PlayMaker, and Sibelius®. For more information about Avid solutions and services, visit www.avid.com, connect with Avid on Facebook, Instagram, Twitter, YouTube, LinkedIn, or subscribe to Avid Blogs.

© 2016 Avid Technology, Inc. All rights reserved. Avid, the Avid logo, Avid Everywhere, iNEWS, Interplay, ISIS, AirSpeed, Media Composer, Pro Tools, and Sibelius are trademarks or registered trademarks of Avid Technology, Inc. or its subsidiaries in the United States and/or other countries. The Interplay name is used with the permission of the Interplay Entertainment Corp. which bears no responsibility for Avid products. All other trademarks are the property of their respective owners. Product features, specifications, system requirements and availability are subject to change without notice.

AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Operations
(unaudited - in thousands, except per share data)

		Three Months Ended						Twelve Months Ended
		December 31,						December 31,
		2015			2014			2015			2014

Net revenues:
	Products	$	91,247		$	91,412		$	336,371		$	378,627
	Services		47,559			36,784			169,224			151,624
	Total net revenues		138,806			128,196			505,595			530,251

Cost of revenues:
	Products		39,465			35,867			131,881			143,765
	Services		15,447			14,681			61,501			60,656
	Amortization of intangible assets		1,950			-			4,063			50
	Total cost of revenues		56,862			50,548			197,445			204,471

Gross profit			81,944			77,648			308,150			325,780

Operating expenses:
	Research and development		24,190			23,212			95,898			90,390
	Marketing and selling		30,091			34,527			122,511			133,049
	General and administrative		21,463			22,222			74,109			81,181
	Amortization of intangible assets		786			375			2,354			1,626
	Restructuring costs (recoveries), net		5,766			-			6,305			(165	)
	Total operating expenses		82,296			80,336			301,177			306,081

Operating (loss) income			(352	)		(2,688	)		6,973			19,699

Interest and other expense, net			(1,727	)		(1,620	)		(6,408	)		(2,783	)
(Loss) income before income taxes			(2,079	)		(4,308	)		565			16,916

Provision for (benefit from) income taxes, net			2,306			761			(1,915	)		2,188
Net (loss) income			(4,385	)		(5,069	)		2,480			14,728

(Loss) income per share - basic and diluted			(0.11	)		(0.13	)		0.06			0.38

Weighted-average common shares outstanding - basic			39,439			39,234			39,423			39,147
Weighted-average common shares outstanding - diluted			39,439			39,234			40,380			39,267

AVID TECHNOLOGY, INC.
Reconciliations of GAAP financial measures to Non-GAAP financial measures
(unaudited - in thousands, except per share data)
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2015			2014			2015			2014
Non-GAAP Revenue
GAAP revenue	$	138,806		$	128,196		$	505,595		$	530,251
Amortization of acquired deferred revenue		858			-			858			-
Non-GAAP revenue		139,664			128,196			506,453			530,251

Non-GAAP Gross Profit
GAAP gross profit		81,944			77,648			308,150			325,780
Amortization of acquired deferred revenue		858			-			858			-
Amortization of intangible assets		1,950			-			4,063			50
Stock-based compensation		171			282			823			675
Non-GAAP gross profit		84,923			77,930			313,894			326,505

Non-GAAP Operating Expenses
GAAP operating expenses		82,296			80,336			301,177			306,081
Less Amortization of intangible assets		(786	)		(375	)		(2,354	)		(1,626	)
Less Stock-based compensation		(1,612	)		(8,513	)		(8,691	)		(10,837	)
Less Restructuring (costs) recoveries, net		(5,766	)		-			(6,305	)		165
Less Restatement costs		(51	)		(3,919	)		(1,039	)		(23,327	)
Less Acquisition, integration and other costs		(1,595	)		-			(9,232	)		-
Less Efficiency program costs		(1,144	)		-			(1,144	)		-
Non-GAAP operating expenses		71,342			67,529			272,412			270,456

Non-GAAP Operating Income
GAAP operating (loss) income		(352	)		(2,688	)		6,973			19,699
Amortization of acquired deferred revenue		858			-			858			-
Amortization of intangible assets		2,736			375			6,417			1,676
Stock-based compensation		1,783			8,795			9,514			11,512
Restructuring costs (recoveries), net		5,766			-			6,305			(165	)
Restatement costs		51			3,919			1,039			23,327
Acquisition, integration and other costs		1,595			-			9,232			-
Efficiency program costs		1,144			-			1,144			-
Non-GAAP operating Income		13,581			10,401			41,482			56,049

Adjusted EBITDA
Non-GAAP operating income (from above)		13,581			10,401			41,482			56,049
Depreciation and amortization		3,416			3,858			13,672			16,278
Adjusted EBITDA		16,997			14,259			55,154			72,327

Adjusted Free Cash Flow
GAAP net cash provided by (used in) operating activities		2,061			10,933			(34,026	)		(9,897	)
Capital expenditures		(4,220	)		(1,632	)		(15,330	)		(13,292	)
Restructuring payments		564			1,127			1,616			7,212
Restatement payments		321			5,756			3,945			28,658
Acquisition, integration and other payments		1,988			-			6,946			-
Efficiency program payments		1,556			-			1,556			-
Adjusted free cash flow	$	2,270		$	16,184		$	(35,293	)	$	12,681

These non-GAAP measures reflect how Avid manages its businesses internally.  Avid’s non-GAAP measures may vary from how other companies present non-GAAP measures. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with, disclosures required by generally accepted accounting principles, or GAAP. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP.

AVID TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(unaudited - in thousands)

	December 31,			December 31,
	2015			2014
ASSETS:
Current assets:
Cash and cash equivalents	$	17,902		$	25,056
Accounts receivable, net of allowances of $9,226 and $10,692
at December 31, 2015 and 2014, respectively		58,807			54,655
Inventories		48,073			48,001
Prepaid expenses		6,548			6,892
Other current assets		6,119			17,932
Total current assets		137,449			152,536

Property and equipment, net		35,481			32,136
Intangible assets, net		33,219			2,445
Goodwill		32,643			-
Long-term deferred tax assets, net		2,011			2,208
Other long-term assets		7,123			2,274
Total assets	$	247,926		$	191,599

LIABILITIES AND STOCKHOLDERS' DEFICIT:
Current liabilities:
Accounts payable	$	45,511		$	32,951
Accrued compensation and benefits		28,124			32,636
Accrued expenses and other current liabilities		35,354			32,353
Income taxes payable		1,023			5,480
Short-term debt		5,000			-
Deferred revenues		189,887			206,608
Total current liabilities		304,899			310,028

Long-term debt, net of debt discount		95,950			-
Long-term deferred tax liabilities, net		3,443			136
Long-term deferred revenues		158,495			208,232
Other long-term liabilities		14,711			14,273
Total liabilities		577,498			532,669

Stockholders' deficit:
Common stock. $0.01 par value, 100,000 shares authorized; 42,339 shares
and 42,339 shares issued and 39,530 shares and 39,294 shares outstanding
at December 31, 2015 and 2014, respectively		423			423
Additional paid-in capital		1,055,838			1,049,969
Accumulated deficit		(1,319,318	)		(1,321,798	)
Treasury stock at cost, net of reissuances, 2,809 shares
and 3,045 shares at December 31, 2015 and 2014, respectively		(58,336	)		(68,051	)
Accumulated other comprehensive income		(8,179	)		(1,613	)
Total stockholders' deficit		(329,572	)		(341,070	)
Total liabilities and stockholders' deficit	$	247,926		$	191,599

AVID TECHNOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited - in thousands)

				Twelve Months Ended
				December 31,
				2015			2014

Cash flows from operating activities:
	Net income			$	2,480		$	14,728
	Adjustments to reconcile net income to net cash used in operating activities:
		Depreciation and amortization			20,088			17,954
		Recovery for doubtful accounts			(23	)		(143	)
		Stock-based compensation expense			9,514			11,513
		Non-cash interest expense			2,890			220
		Unrealized foreign currency transaction gains			(7,013	)		(6,730	)
		(Benefit from) provision for deferred taxes			(6,693	)		69
		Changes in operating assets and liabilities:
			Accounts receivable		(1,259	)		2,258
			Inventories		3,056			12,122
			Prepaid expenses and other current assets		10,000			(2,130	)
			Accounts payable		11,232			(947	)
			Accrued expenses, compensation and benefits and other liabilities		(11,842	)		(5,758	)
			Income taxes payable		(1,041	)		(1,090	)
			Deferred revenues		(65,415	)		(51,963	)
Net cash used in operating activities					(34,026	)		(9,897	)

Cash flows from investing activities:
	Purchases of property and equipment				(15,330	)		(13,292	)
	Change in other long-term assets				(43	)		(8	)
	Payments for business and technology acquisitions, net of cash acquired				(65,967	)		-
	Proceeds from divestiture of consumer business				-			1,500
	Increase in restricted cash				(456	)		-
Net cash used in investing activities					(81,796	)		(11,800	)

Cash flows from financing activities:
	Proceeds from long-term debt, net of issuance costs				120,401			-
	Payments for repurchase of common stock				(7,999	)		-
	Cash paid for capped call transactions				(10,125	)		-
	Proceeds from the issuance of common stock under employee stock plans				5,035			252
	Common stock repurchases for tax withholdings for net settlement of equity awards				(1,559	)		(688	)
	Proceeds from revolving credit facilities				70,500			25,500
	Payments on revolving credit facilities				(65,500	)		(25,500	)
	Payments of credit facilities of issuance costs				(1,195	)		-
Net cash provided by (used in) financing activities					109,558			(436	)

Effect of exchange rate changes on cash and cash equivalents					(890	)		(1,014	)
Net decrease in cash and cash equivalents					(7,154	)		(23,147	)
Cash and cash equivalents at beginning of period					25,056			48,203
Cash and cash equivalents at end of period				$	17,902		$	25,056

AVID TECHNOLOGY, INC.
Supplemental Revenue Information
(unaudited - in thousands)

		December 31,		September 30,		December 31,
	Revenue Backlog*	2015		2015		2014

	Pre-2011	$	25,868	$	37,885	$	84,597
	Post-2010	$	322,514	$	326,622	$	330,243
	Deferred Revenue	$	348,382	$	364,507	$	414,840
	Other Backlog	$	203,704	$	148,776	$	124,670
	Total Revenue Backlog	$	552,086	$	513,283	$	539,510

	Post 2010	$	526,218	$	475,398	$	454,913

	The expected timing of recognition of revenue backlog as of December 31, 2015 is as follows:

		2016		2017		2018		Thereafter		Total
	Orders executed prior to January 1, 2011	$	24,772	$	952	$	144	$	-	$	25,868
	Orders executed or materially modified on or	$	148,218	$	75,657	$	47,751	$	50,887	$	322,513
	after January 1, 2011
	Other Backlog	$	95,894	$	41,801	$	20,260	$	45,750	$	203,705
	Total Revenue Backlog	$	268,884	$	118,410	$	68,155	$	96,637	$	552,086

	*A definition of Revenue Backlog is included in the supplemental financial and operational data sheet available on our investor relations webpage at ir.avid.com.
	Note: current estimates could change based on a number of factors, including (i) the timing of delivery of products and services, (ii) customer cancellations or change order, (iii) changes in the estimated period of time Implied Maintenance Release PCS is provided to customers, including as a result of changes in business practices.

CONTACT: Media Contact
Sara Griggs
Avid
310.821.0801
[email protected]

Investor Contact
Jonathan Huang
Avid
978.640.5126
[email protected]