avid-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number: 1-36254

__________________

Avid Technology, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

04-2977748

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

75 Network Drive

Burlington

Massachusetts

01803

Address of Principal Executive Offices, Including Zip Code

(978) 640-6789

Registrant's Telephone Number, Including Area Code

__________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $.01 par value

AVID

Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 under the Exchange Act.


Large accelerated filer	o	Accelerated Filer	x
Non-accelerated filer	o	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 under the Exchange Act).

Yes ☐ No x

The number of shares outstanding of the registrant’s Common Stock, as of April 30, 2021, was 45,193,579.

AVID TECHNOLOGY, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION

ITEM 1.	UNAUDITED F INANCIAL STATEMENT S
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020	1
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020	2
	Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	3
	Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three months ended March 31, 2021 and 2020	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	5
	Notes to Unaud ited Condensed Consolidated Financial Statements	6
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	28
ITEM 4.	CONTROLS AND PROCEDURES	28

PART II.	OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	30
ITEM 1A.	RISK FACTORS	30

ITEM 6.	EXHIBITS	30

INDEX TO EXHIBITS		31

SIGNATURE		32

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Form 10-Q”) includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-Q that relate to future results or events are forward-looking statements. Forward-looking statements may be identified by use of forward-looking words, such as “anticipate,” “believe,” “confidence,” “could,” “estimate,” “expect,” “feel,” “intend,” “may,” “plan,” “should,” “seek,” “will,” and “would,” or similar expressions.

Forward-looking statements may involve subjects relating to, among others, the following:

•the effects that the COVID-19 pandemic and its related consequences may have on the national and global economy and on our business and operations, revenues, cash flows and profitability, and capital resources;

•our ability to successfully implement our strategy, including our cost saving measures and other actions implemented in response to the COVID-19 pandemic;

•the anticipated trends and developments in our markets and the success of our products in these markets;

•our ability to develop, market, and sell new products and services;

•our business strategies and market positioning;

•our ability to achieve our goal of expanding our market positions;

•our ability to accelerate growth of our Cloud-enabled platform;

•anticipated trends relating to our sales, financial condition or results of operations, including our shift to a recurring revenue model and complex enterprise sales with long sales cycles;

•the expected timing of recognition of revenue backlog as revenue, and the timing of recognition of revenues from subscription offerings;

•our ability to successfully consummate acquisitions, or investment transactions and successfully integrate acquired businesses;

•the anticipated performance of our products;

•our ability to maintain adequate supplies of products and components, including through sole-source supply arrangements;

•our plans regarding repatriation of foreign earnings;

•the outcome, impact, costs, and expenses of pending litigation or any new litigation or government inquiries to which we may become subject;

•the effect of the continuing worldwide macroeconomic uncertainty on our business and results of operations, including Brexit;

•our compliance with covenants contained in the agreements governing our indebtedness;

•our ability to service our debt and meet the obligations thereunder;

•the effect of seasonal changes in demand for our products and services;

•fluctuations in foreign exchange and interest rates;

•the risk of restatement of our financial statements;

•estimated asset and liability values;

•our ability to protect and enforce our intellectual property rights;

•the expected availability of cash to fund our business and our ability to maintain adequate liquidity and capital resources, generally and in the wake of the COVID-19 pandemic; and

•worldwide political uncertainty, in particular the risk that the United States may withdraw from or materially modify international trade agreements.

Actual results and events in future periods may differ materially from those expressed or implied by forward-looking statements in this Form 10-Q. There are a number of factors that could cause actual events or results to differ materially from those indicated or implied by forward-looking statements, many of which are beyond our control, including the risk factors discussed herein and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020, in Part II, Item 1A of this Quarterly Report on Form 10-Q, and in other documents we file from time to time with the U.S. Securities and Exchange Commission (“SEC”). In addition, the forward-looking statements contained in this Form 10-Q represent our estimates only as of the date of this filing and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so, whether to reflect actual results, changes in assumptions, changes in other factors affecting such forward-looking statements, or otherwise.

We own or have rights to trademarks and service marks that we use in connection with the operation of our business. “Avid” is a trademark of Avid Technology, Inc. Other trademarks, logos, and slogans registered or used by us and our subsidiaries in the United States and other countries include, but are not limited to, the following: Avid, Avid NEXIS, AirSpeed, FastServe, MediaCentral, Media Composer, Pro Tools, and Sibelius. Other trademarks appearing in this Form 10-Q are the property of their respective owners.

PART I - FINANCIAL INFORMATION

ITEM 1. UNAUDITED FINANCIAL STATEMENTS

AVID TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands except per share data, unaudited)


	Three Months Ended
	March 31,
	2021		2020
Net revenues:
Products	$	33,267	$	34,711
Services	61,097		51,742
Total net revenues	94,364		86,453

Cost of revenues:
Products	19,493		20,962
Services	13,455		12,340
Total cost of revenues	32,948		33,302
Gross profit	61,416		53,151

Operating expenses:
Research and development	15,417		15,425
Marketing and selling	20,744		25,289
General and administrative	13,635		12,744
Restructuring costs, net	1,074		145
Total operating expenses	50,870		53,603

Operating income (loss)	10,546		(452)

Interest and other expense, net	(5,673)		(5,283)
Income (loss) before income taxes	4,873		(5,735)
Provision for income taxes	482		122
Net income (loss)	$	4,391	$	(5,857)

Net income (loss) per common share – basic and diluted	$0.10		$(0.14)


Weighted-average common shares outstanding – basic	44,559		43,254
Weighted-average common shares outstanding – diluted	46,204		43,254

The accompanying notes are an integral part of the condensed consolidated financial statements.

AVID TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands, unaudited)


	Three Months Ended
	March 31,
		2021		2020
Net income (loss)		$	4,391	$	(5,857)

Other comprehensive loss:
Foreign currency translation adjustments		(1,457)		(815)

Comprehensive income (loss)		$	2,934	$	(6,672)

The accompanying notes are an integral part of the condensed consolidated financial statements.

AVID TECHNOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, unaudited)


	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	55,624	$	79,899
Restricted cash	1,422		1,422
Accounts receivable, net of allowances of $1,522 and $1,478 at March 31, 2021 and December 31, 2020, respectively	58,831		78,614
Inventories	27,616		26,568
Prepaid expenses	7,308		6,044
Contract assets	21,955		18,579
Other current assets	2,274		2,366
Total current assets	175,030		213,492
Property and equipment, net	15,931		16,814
Goodwill	32,643		32,643
Right of use assets	27,538		29,430
Deferred tax assets, net	6,299		6,801
Other long-term assets	5,544		5,958
Total assets	$	262,985	$	305,138

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	19,220	$	21,823
Accrued compensation and benefits	25,675		29,105
Accrued expenses and other current liabilities	35,088		42,264
Income taxes payable	1,405		1,664
Short-term debt	9,156		4,941
Deferred revenue	86,172		87,974
Total current liabilities	176,716		187,771
Long-term debt	175,125		202,759
Long-term deferred revenue	11,334		11,284
Long-term lease liabilities	26,913		28,462
Other long-term liabilities	7,471		7,786
Total liabilities	397,559		438,062

Commitments and contingencies (Note 7)

Stockholders’ deficit:
Common stock	448		442
Additional paid-in capital	1,032,068		1,036,658
Accumulated deficit	(1,163,956)		(1,168,347)

Accumulated other comprehensive loss	(3,134)		(1,677)
Total stockholders’ deficit	(134,574)		(132,924)
Total liabilities and stockholders’ deficit	$	262,985	$	305,138

The accompanying notes are an integral part of the condensed consolidated financial statements.

AVID TECHNOLOGY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(in thousands, unaudited)


Three Months Ended March 31, 2021
	Shares of Common Stock	Additional			Accumulated Other	Total
	Outstanding	Common Stock	Paid-in Capital	Accumulated Deficit		Comprehensive Loss	Stockholders’ Deficit
Balances at January 1, 2021	44,420	442	1,036,658	(1,168,347)		(1,677)	(132,924)

Stock issued pursuant to employee stock plans	592	6	(7,712)	—		—	(7,706)

Stock-based compensation	—	—	3,122	—		—	3,122

Net income	—	—	—	4,391		—	4,391

Other comprehensive loss	—	—	—	—		(1,457)	(1,457)

Balances at March 31, 2021	45,012	448	1,032,068	(1,163,956)		(3,134)	(134,574)

Three Months Ended March 31, 2020

Shares of
Common Stock

Additional

Accumulated
Other

Total

Outstanding

Common
Stock

Paid-in
Capital

Accumulated
Deficit

Comprehensive
Loss

Stockholders’
Deficit

SEC Form 10-Q filed by Avid Technology, Inc.