Quest Software: Fiscal 4Q09 Financial Results

Quest Software, Inc. reported financial results for the fourth quarter and year ended December 31, 2009.

For the quarter, total revenues were $194.5 million, a 3.5% decrease compared to the prior year’s fourth quarter revenue of $201.6 million. For the year, total revenues in fiscal 2009 were $695.2 million, a 5.5% decrease compared to $735.4 million in fiscal 2008. Operating margins increased to 23.4% and 12.0% for the three and twelve months ended December 31, 2009, respectively, as compared to 19.7% and 11.1% for the three and twelve months ended December 31, 2008, respectively. On a non-GAAP basis, operating margins were 24.8% and 22.4% for the three and twelve months ended December 31, 2009, respectively.

Quest Software’s cash and investments at December 31, 2009, totaled $383.0 million, an increase of $21.0 million over the comparable balance at September 30, 2009. Quest Software generated cash flow from operations of $36.7 million in the fourth quarter of 2009.

“Overall, these results demonstrate our success through the year in expanding operating margins and delivering high-value solutions to our customers,” said Doug Garn, President and CEO of Quest Software. “We believe that we are entering 2010 with positive momentum in our existing and new markets and we remain enthusiastic in our ability to capitalize on the investments that we made in our people, products and infrastructure.”

GAAP Results
Quest Software’s net income for the fourth quarter of 2009 was $37.0 million, or $0.40 per fully diluted share. This compares to net income of $29.2 million, or $0.28 per share on a fully diluted basis, for the fourth quarter of 2008. Operating margins increased year-over-year from 19.7% to 23.4% in the fourth quarter, resulting in operating income of $45.5 million, which compares to $39.6 million for the corresponding period in 2008. Net income for the year ended December 31, 2009 was $70.4 million, or $0.75 per fully diluted share, versus net income of $68.0 million, or $0.64 per fully diluted share, for fiscal year 2008.

Non-GAAP Results
On a non-GAAP basis, net income for the fourth quarter of 2009 was $36.9 million, or $0.40 per fully diluted share. This compares to non-GAAP net income of $39.5 million, or $0.38 per share on a fully diluted basis, for the fourth quarter of 2008. The non-GAAP operating margin was 24.8% in the fourth quarter of 2009, resulting in non-GAAP operating income of $48.3 million, compared to non-GAAP operating margin and operating income of 26.1% and $52.6 million, respectively, for the corresponding period in 2008. For the year ended December 31, 2009, non-GAAP net income was $117.8 million, or $1.25 per fully diluted share. This compares to non-GAAP net income of $106.2 million, or $1.00 per fully diluted share, for the year ended December 31, 2008. The non-GAAP operating margin was 22.4% for fiscal year 2009, resulting in non-GAAP operating income of $155.6 million, compared to non-GAAP operating margin of 18.5% and non-GAAP operating income of $136.0 million for fiscal year 2008.

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