Corel Corporation Reports Third Quarter 2008 Financial Results
Revenue Up 10% Year over Year
Ottawa, Canada - Corel Corporation (NASDAQ:CREL) (TSX:CRE) today reported financial results for its third quarter ended August 31, 2008. Revenues in the third quarter of fiscal 2008 were $66.2 million, compared to $60.4 million in the third quarter fiscal 2007. GAAP net income in the third quarter of fiscal 2008 was $1.6 million, or $0.06 per basic and diluted share, compared to GAAP net loss of $6.8 million, or $(0.27) per basic and diluted share, in the third quarter of fiscal 2007.
Non-GAAP adjusted net income for the third quarter fiscal 2008 was $10.2 million, or $0.39 per diluted share, compared to non-GAAP adjusted net income for the third quarter of fiscal 2007 of $8.1 million, or $0.31 per diluted share. Non-GAAP adjusted EBITDA in the third quarter of 2008 was $15.8 million, compared to $13.5 million in the third quarter of 2007.
“Corel delivered a strong third quarter, posting revenue growth across all our key business units and geographies,” said Kris Hagerman, Interim Chief Executive Officer, Corel Corporation. “Corel’s solid performance in a challenging economic environment is a testament to the commitment of our global team and to the quality and value our products deliver to millions of customers worldwide.”
Revenues for the nine months ended August 31, 2008 were $198.8 million, compared to revenues of $178.0 million for the nine months ended August 31, 2007. GAAP net income for the nine months ended August 31, 2008 was $2.5 million, or $0.10 per basic and diluted share, compared to a GAAP net loss of $16.3 million, or $(0.66) per basic and diluted share, for the nine months ended August 31, 2007.
Non-GAAP adjusted net income for the nine months ended August 31, 2008 was $26.4 million, or $1.01 per diluted share, compared to non-GAAP adjusted net income for the nine months ended August 31, 2007 of $20.7 million, or $0.80 per diluted share. Non-GAAP adjusted EBITDA for the nine months ended August 31, 2008 was $44.0 million, compared to $37.4 million for the nine months ended August 31, 2007.
Fourth Quarter Fiscal 2008 Guidance
Corel provided guidance for the fourth quarter ending November 30, 2008. The Company currently expects:
* Revenue in the range of $71 million to $75 million.
* GAAP net income in the range of $4.0 million to $6.0 million and non-GAAP adjusted net income in the range of $14.0 million to $16.0 million.
* GAAP earnings per share in the range of $0.15 to $0.22 and non-GAAP earnings per share in the range of $0.52 to $0.60.
Fiscal 2008 Guidance
Resulting guidance for the year ending November 30, 2008 is as follows:
* Revenue in the range of $270 million to $274 million.
* GAAP net income of $6.5 million to $8.5 million and non-GAAP adjusted net income of $40.5 million to $42.5 million.
* GAAP earnings per share of $0.25 to $0.32 and non-GAAP earnings per share of $1.54 to $1.62.
Corel will host a conference call to discuss its financial results at 8:00 a.m. Eastern Time today. To access the conference call, please dial (877) 857-6173 or (719) 325-4751 approximately 5 minutes prior to the 8:00 AM ET start time. A live webcast will also be available through Corel’s Investor Relations website at http://investor.corel.com/events.cfm.
Following the call, an audio replay will be available between 11:00 AM ET October 3, 2008 and 12:00 AM ET October 17, 2008 from Corel’s Investor Relations website or by calling (888) 203-1112 or (719) 457-0820, Passcode: 7387664.
This news release includes forward-looking statements that are based on certain assumptions and reflect our current expectations. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements to differ materially from any future results, performance, or achievements discussed or implied by such forward-looking statements. Such risks include competitive threats from well established software companies that have significantly greater market share and resources than us and from online services companies that are increasingly seeking to provide software products at little or no incremental cost to their customers to expand their Internet presence and build consumer loyalty. We rely on a small number of key strategic relationships for a significant percentage of our revenue and these relationships can be modified or terminated at any time. In addition, our core products have been marketed for many years and the packaged software market in North America and Europe is relatively mature and characterized by modest growth. Accordingly, we must successfully complete acquisitions, penetrate new markets or increase penetration of our installed base to achieve revenue growth. In addition, we face potential claims from third parties who may hold patent and other intellectual property rights which purport to cover various aspects of our products and from certain of our customers who may be entitled to indemnification from us in respect of potential claims they may receive from third parties related to their use or distribution of our products.
These and other risks, uncertainties and other important factors are described in Corel’s Annual Report dated February 8, 2008, filed with the Securities and Exchange Commission (SEC) and the Canadian Securities Administrators (CSA) under the caption “Risk Factors” and elsewhere. A copy of the Corel Annual Report and such other filings can be obtained on Corel’s website, on the SEC’s website at http://www.sec.gov or on the CSA’s website at http://www.sedar.com. Forward-looking statements speak only as of the date of the document in which they are made. We disclaim any obligation or undertaking to provide any updates or revisions to any forward-looking statement to reflect any change in our expectations or any change in events, conditions or circumstances on which the forward-looking statement is based.
Financial Presentation and Use of Non-GAAP Measures:
Our financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP, which differ in certain material respects from Canadian generally accepted accounting principles. In addition, our financial statements and information in this release are presented in U.S. Dollars, unless otherwise indicated. This news release includes certain non-GAAP financial measures, such as adjusted net income and adjusted EBITDA. We use these non-GAAP financial measures to confirm our compliance with covenants contained in our debt facilities, as supplemental indicators of our operating performance and to assist in evaluation of our liquidity. These measures do not have any standardized meanings prescribed by GAAP and therefore are not comparable to the calculation of similar measures used by other companies, and should not be viewed as alternatives to measures of financial performance or changes in cash flows calculated in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the closest GAAP measures are set out in the notes to the financial statements attached to this news release.
Corel is one of the world’s top software companies with more than 100 million active users in over 75 countries. We develop software that helps people express their ideas and share their stories in more exciting, creative and persuasive ways. Through the years we’ve built a reputation for delivering innovative, trusted products that are easy to learn and use, helping people achieve new levels of productivity. The industry has responded with hundreds of awards for software innovation, design and value.
Our award-winning product portfolio includes some of the world’s most widely recognized and popular software brands, including CorelDRAW® Graphics Suite, Corel® Painter™, Corel DESIGNER® Technical Suite, Corel® Paint Shop Pro® Photo, VideoStudio®, WinDVD®, Corel® WordPerfect® Office and WinZip®. Our global headquarters are in Ottawa, Canada, with major offices in the United States, United Kingdom, Germany, China, Taiwan and Japan.
© Corel Corporation. All rights reserved. Corel, CorelDRAW, Paint Shop Pro, Painter, Corel DESIGNER, VideoStudio, WordPerfect, WinDVD, WinZip, iGrafx and the Corel logo are trademarks or registered trademarks of Corel Corporation and/or its subsidiaries. All other product, font and company names and logos are trademarks or registered trademarks of their respective companies.
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