Double-Take: Fiscal 1Q08 Financial Results

Double-Take Software, Inc. announced its financial results for the first quarter ended March 31, 2008.

"We are very pleased with the results of the first quarter of 2008. The company continues to generate great growth in revenues while generating solid earnings and cash flow, unusual for a company our size and with our growth rate; and we have done so while absorbing acquisition costs. Our ‘Full System’ release in late 2007 has been a significant differentiator for us. It gives Double-Take the ability to move full systems, virtual and physical, anytime, including while they are in production, anywhere, including over wide areas. These capabilities, we believe, will benefit us greatly in the future as we grow and broaden our infrastructure software solutions," said Dean Goodermote, Chairman and CEO of Double-Take Software, Inc.

Total revenue for the first quarter of 2008, which consists of software revenue and maintenance and professional services revenue, increased 28.3% to $23.0 million from $17.9 million in the first quarter of 2007. Software revenue increased 19.5% to $12.4 million in the first quarter of 2008 from $10.4 million in the first quarter of 2007. Maintenance and professional services revenue increased 40.4% to $10.6 million in the first quarter of 2008 from $7.5 million in the first quarter of 2007.

Income from operations was $3.5 million in the first quarter of 2008 compared to $2.5 million in the first quarter of 2007. Net income totaled $2.2 million, or $0.09 per diluted share in the first quarter of 2008 compared with $2.9 million, or $0.13 per diluted share, in the first quarter of 2007. The decrease was due to income tax expense increasing to $1.6 million in the first quarter of 2008 from $0.2 million in the first quarter of 2007. For comparative purposes, if the effective tax rate for the first quarter of 2008 had been in effect in the first quarter of 2007, net income per diluted share in the first quarter of 2007 would have been reduced by $0.05.

Income from operations on an adjusted, non-GAAP basis in the first quarter of 2008 was $4.4 million compared with $2.8 million in first quarter of 2007. Adjusted, non-GAAP net income in the first quarter of 2008 was $3.0 million, or $0.13 per diluted share, compared with $3.2 million, or $0.14 per diluted share in the first quarter of 2007. If the effective tax rate on adjusted, non-GAAP net income for the first quarter of 2008 had been in effect in the first quarter of 2007, adjusted, non-GAAP net income per diluted share in the first quarter of 2007 would have been reduced by $0.05 per diluted share.

The company calculates these adjusted non-GAAP income measures by excluding the effects in the respective periods of the non-cash stock based compensation, resulting from the application of SFAS 123R, from Operating Expenses. An explanation of these adjusted, non-GAAP financial measures and a reconciliation of these measures to GAAP results are provided in the tables included in this press release, and these measures should only be viewed together with the reconciliation and the further explanation given under "Non-GAAP Financial Measures" below.

Cash generated from operations was $5.8 million in the first quarter and cash and short term investments at March 31, 2008 totaled $69.8 million, an increase of approximately $5.1 million from December 31, 2007.

2008 Financial Guidance
Revenue for the second quarter of 2008 is expected to be between $24.4 and $25.0 million and adjusted non-GAAP operating income is expected to be $5.2 to $5.4 million. The effective income tax rate on adjusted, non-GAAP net income for the second quarter is expected to be approximately 37% and adjusted, non-GAAP net income per share is expected to be $0.15 to $0.16 per share excluding stock-based compensation charges. Weighted average diluted shares using the treasury method are expected to be approximately 23.4 to 23.5 million shares.

After taking the results of the first quarter of 2008 into account, the Company is increasing its full year revenue, operating income and earnings per share guidance. Full-year 2008 revenue is now expected to be between $101.7 and $103.5 million. Non-GAAP operating income is expected to be $22.2 to $23.0 million and adjusted, non-GAAP income per share for the full year 2008, after taking into account our reduced ability to earn investment returns in the current economic environment, is expected to be in the range of $0.65 to $0.67 excluding the impact of stock based compensation charges. The effect of reduced investment returns on adjusted, non-GAAP income per share is expected to be approximately $0.01 per share in each of the second through fourth quarters of 2008 and $0.02 for the full year. The full year effective tax rate on non-GAAP net income is expected to be approximately 37%. Weighted average diluted shares using the treasury method are assumed to be approximately 23.4 to 23.5 million shares.

Double-Take Software, Inc.