Double-Take: Fiscal 2Q08 Financial Results

Double-Take Software, Inc. announced its financial results for the second quarter of 2008.

“We are pleased with the performance of the company, which once again produced solid earnings. Revenue also met our expectations, though it was muted by weaker than expected license sales out of Europe. Sales of our virtual systems products continued to sell well and we secured our first key accounts for our Linux offering,” said Dean Goodermote, Chairman and CEO of Double-Take Software, Inc. “We are also excited about the long term potential of our acquisition of emBoot, which will provide our customers with increased capabilities to dynamically manage their workloads,” he added.

Total revenue for the quarter, which consists of software revenue and maintenance and professional services revenue, increased 21.9% to $24.4 million in the second quarter of 2008 from $20.0 million in the second quarter of 2007. Software revenue increased 13.6% to $13.6 million in the second quarter of 2008 from $12.0 million in the second quarter of 2007. Maintenance and professional services revenue increased 34.4% to $10.8 million in the second quarter of 2008 from $8.0 million in the second quarter of 2007.

Income from operations was $4.4 million in the second quarter of 2008 compared to $4.0 million in the second quarter of 2007. Net income totaled $2.7 million, or $0.11 per diluted share in the second quarter of 2008 compared with $7.5 million, or $0.33 per diluted share, in the second quarter of 2007. The decrease in net income and diluted earnings per share was due to income tax expense increasing to $2.2 million in the second quarter of 2008 from an income tax benefit of $2.8 million in the second quarter of 2007. For comparative purposes, if the effective tax rate for the second quarter of 2008 had been in effect in the second quarter of 2007, net income per diluted share in the second quarter of 2007 would have been $0.11.

Income from operations on an adjusted, non-GAAP basis in the second quarter of 2008 was $5.5 million compared with $4.4 million in the second quarter of 2007. Adjusted, non-GAAP net income in the second quarter of 2008 was $3.7 million, or $0.16 per diluted share, compared with $8.0 million, or $0.35 per diluted share in the second quarter of 2007. The decrease in adjusted, non-GAAP net income and diluted earnings per share was due to income tax expense increasing to $2.2 million in the second quarter of 2008 from an income tax benefit of $2.8 million in the second quarter of 2007. For comparative purposes, if the effective tax rate for the second quarter of 2008 had been in effect in the second quarter of 2007, adjusted, non-GAAP net income per diluted share in the second quarter of 2007 would have been $0.14.

Cash generated from operations was $5.2 million in the second quarter. Cash and short term investments at June 30, 2008 totaled $73.8 million, an increase of approximately $4.0 million from March 31, 2008.

Addition to Board of Directors
The Company is pleased to announce the appointment of Deborah Besemer to the Board of Directors. Previously, Ms. Besemer served as the President and Chief Executive Officer of BrassRing LLC and spent more than a decade at Lotus Development, where she served as Executive Vice-President of Worldwide Field Operations. She is a former Chairperson of the Massachusetts Software Council and has previously served on the boards of public and private companies.
“Deborah’s track record of proven leadership is impressive. She brings to our board a rich software and technology background as well as expertise in global expansion,” said Goodermote.

2008 Financial Guidance
The Company is providing the following financial guidance for the third quarter and full year 2008. This guidance does include the expected impact from the operations of emBoot, Inc which was acquired on July 28, 2008.

Revenue for the third quarter of 2008 is expected to be between $25.7 and $26.3 million and adjusted non-GAAP operating income is expected to be $5.3 to $5.5 million net of the effect of the emBoot acquisition, which includes retention bonuses and amortization of intangible assets, of approximately $0.3 million. The effective income tax rate on adjusted, non-GAAP net income for the third 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 net of a reduction of approximately $0.01 per share from emBoot. Weighted average diluted shares using the treasury method are expected to be approximately 23.2 to 23.3 million shares.

The Company continues to expect full-year 2008 revenue to be between $101.7 and $103.5 million. The Company is changing its previously announced guidance for non-GAAP operating income and earnings per share for full year 2008 solely to account for the effect of the emBoot acquisition. Non-GAAP operating income is expected to be $21.8 to $22.2 million which is down from previous guidance of $22.2 to $23.0 million solely due to the effect of the emBoot acquisition, which includes retention bonuses and amortization of intangible assets, of approximately $0.7 to $0.8 million. Adjusted, non-GAAP income per share for the full year 2008 is expected to be in the range of $0.63 to $0.65 which is down from previous guidance of $0.65 to $0.67 per share solely from the effect of the emBoot acquisition of approximately $0.02 per share. 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 23.3 to 23.4 million shares.