Jonathan Huang – Vice President, Investor Relations and Treasury Louis Hernandez – Chairman, President & Chief Executive Officer John Frederick – Chief Financial Officer, Chief Administrative Officer & Executive VP

Steven Frankel – Dougherty & Co. Hamed Khorsand – BWS Financial, Inc.

Good day and welcome to the Avid Q3 2015 Earnings Release Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Jonathan Huang. Please go ahead, sir.

Good afternoon. I'm Jonathan Huang, Vice President of Investor Relations for Avid. And welcome to our Q3 2015 earnings call. With us today are Louis Hernandez, Jr., Avid's Chairman, CEO and President; and John Frederick, Avid's Executive Vice President, Chief Financial and Administrative Officer. On our call today, we will be using both non-GAAP measures and certain operational metrics which are defined in our form 8-K and supplemental financial and operational data sheet available on our Investor Relations webpage. The non-GAAP measures are also reconciled with GAAP measures in tables to our press release and in the supplemental financial and operational data sheet. I would also like to remind you that certain statements made on this call are considered forward-looking statements within the meaning of the securities law such as, for example, statements about expected future performance and the progress of our transformation. Forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. Any forward-looking information relayed on this call speaks only as of this date and we undertake no obligations to update information, except as required by law. Additional information concerning these statements and related risks and uncertainties is contained in the risk factors forward-looking statements section of the company's Annual Report on Form 10-K, the Quarterly Report on Form 10-Q filed with the SEC today, November 5, 2015, and the paragraph that begins with the words certain information in today's press release. Copies of these documents are available at sec.gov from Investor Relations department. We've also added a supplemental presentation today in an effort to complement the narrative. We hope that you will find it helpful. We will also be recording today's call, which will be made available for a two-week replay. You may replay this conference call and access the supplemental presentation by going on the Investor Relations page of our website and clicking the Events and Presentations tab. Later, we will be conducting a question-and-answer session and instructions will be given at that time. And now, I would like to turn the call over to our Chairman, Chief Executive Officer and President, Louis Hernandez, Jr.

Thanks Jonathan, and good afternoon, everyone. Thank you for joining us today. I'll be covering a few topics, including a business update on the third quarter for 2015, an update on Avid's ongoing transformation, a review of the recent media sector trends and observations, the impact of these trends on our customer base and the impact on buying behaviors on media technology overall. I'll also be reviewing how the Avid Everywhere strategy aligns with these trends and observations and the media technology purchasing shift. I'll then comment on the progress of our own transformation, highlight the work that we've done to-date, what's left to do and the economic profile that we'll pursue once we complete the transformation. John will then review our Q3 financial results in more detail, along with our progress since we began the transformation, then offer a long-term financial framework, and finally provide some background and context on our updated guidance for the remainder of 2015. Before I begin, I'd like to comment on why we're so excited about the Avid opportunity. First, we participate in a large and growing media technology market with access to emerging high-growth categories. Second, we are a trusted market leader with significant global distribution. Third, our open platform uniquely positions us to help our customers compete in an industry that is going through a major transition. Fourth, we've made material progress on our own transformation that we started over two years ago, and we're about halfway complete and expect to finish by the second quarter of 2017. Finally, as you'll see in this quarter's results and performance, from the beginning of the transformation, we've made good financial progress, which has been muted to-date by certain headwinds. We look forward to continued progress without the burden of these headwinds and believe this will result in an opportunity for sustained profitable growth. We operate in a very large and growing market, as I mentioned, that's going through a pretty significant transition. Media technology is estimated to be a $65 billion industry growing at about 3% annually according to industry data. However, growth rates differ significantly depending on where you participate in the value chain. The spending is shifting to address the changing business needs from lower growth areas such as traditional broadcast solutions towards spending in higher growth areas such as digital distribution and monetization technologies. As depicted in the right-hand side of this chart, even among the areas that are growing, there is a wide disparity in growth rates. Of the $65 billion market depicted on the left side of this chart, Avid has already expanded its offerings to address approximately $8 billion. Upon completion of the Avid Everywhere vision, we believe we will further expand our addressable market to approximately $20 billion with the opportunity for continued expansion over time. What's driving this change is the overall market behavior. It's probably no surprise that the amount of and the way we consume content is changing radically. Research has shown that the amount of content created annually has increased by two to four times in the last decade. Per capita consumption of that media has increased by about 1.5 times and the number of distribution channels has increased over 10 times. While technology budgets are increasing, we believe there is a shift in where spending is occurring to the higher growth rate areas such as digital distribution and everyone from media companies to vendors have to adjust to this transition. Even the most successful traditional media companies are busy making this transition. Reflective of the resulting economic realities, they must adjust their budgets to be able to increase spending in growth areas often at the expense of traditional technology. However, newer media companies like Netflix and Hulu have the advantage of being able to focus primarily on the growth opportunities. That's really why we created the Avid Everywhere strategy, which is grounded in the Avid Media Central Platform. This is the industry's only commercial end-to-end open and extensible platform that can address the entire workflow on a common platform, whether it's Avid's products or any third-party solution. I think people were surprised that we punctuated this point by the recent certification of both Adobe and Apple products on the platform. It allows any media company or professional to decide how they want to participate and connect to the rest of the ecosystem, whether it's traditional media or new media. Now as we've talked about in prior calls and meetings, the accelerated digitization of the media value chain has collapsed the traditional siloed approach and dramatically altered the media industry value chain. And as a result, it's created opportunities for vendors to solve these fundamental business issues by capitalizing on these changes. Now, when you overlay the growth the industry is seeing with the new value chain that we explained earlier, it's apparent that the winners would be those who can help customers across the entire workflow, driving efficiency and maximizing the value of the content being created. The platform allows us to take advantage of the needs of our heritage customers while helping new media companies accelerate their growth. And that's really what Avid Everywhere is all about, a way to solve the industry problems for both new and traditional media from the largest media enterprise down to the individual creative professional across the entire workflow and simplify integration and interoperability to lower cost for everyone, all on a common operating system. The extensibility of the platform allows us to maximize the lifetime value economically for customers by allowing us to more easily cross-sell and up-sell to our largest customers while now addressing an underpenetrated Tier 3 market segment through cloud-based subscriptions, which we historically have not addressed in a meaningful way. Now, historically, Avid has been known as the trusted partner for some of those well-known media companies around the globe with broad penetration in every segment of the media market. We have significant penetration in major film studios, leading international networks, the largest station groups and most professional music. But what you may not realize is that we're even stronger in the new media markets, as our tools are used to create a large portion of the content from the new media players. In fact, we estimate that 80% to 90% of professionally produced content from streaming providers is created with Avid solutions. Now, we believe this is one of the reasons why we've seen significant progress to-date in platform adoption, which stands at over 28,000 cumulative seats sold and represents over 50% growth since this time last year. We look forward to expanding that penetration and are fully leveraging the platform adoption with more offerings to cross-sell into that base. With the flexibility of the platform, it's no wonder that our largest customers are taking full advantage of our asset management solutions with over 2,100 deployments to-date. And in Tier 3, a relatively underpenetrated market for us, we've already seen over 20,000 subscribers. We believe that Avid Everywhere strategy is one of the reasons that during Q3 our bookings grew approximately 9% year-over-year to reach $121 million on a constant currency basis. Based on publicly available information, this growth appears to be well ahead of the traditional competitors. And speaking of competitors, just as with clients, these changes are having a profound impact on technology vendors as well and some are more successful than others in adapting to this transition. On the vendor landscape, some traditional technology vendors are struggling to adapt. Take Harman, Belden or EVS for example. We believe they remain primarily concentrated in those segments where traditional broadcasters are primarily focused on efficiencies and cost savings. As a result, this group has seen Q3 revenues decline by an average of 23% over 2014. New vendors such as Akamai Media Services or Amazon Web Services are taking advantage of the increase in investments where budgets are growing faster and have recorded average quarterly revenue growth of about 36% for that same period. And as we transition to the higher growth areas, our results indicate that Avid sits right in the middle, as our Q3 revenues decreased only by about 3.5% for the same period. And if we were to have adjusted for the results of the currency fluctuations, we would have been flat for the period. We believe that we are able to help traditional media companies make that transition and also support those new participants as we progress in our own transformation. Now, speaking of the transformation, we believe we're just over halfway through all of the dramatic changes the team has been working on here at Avid over the last few years in order to position us to capitalize in these market dynamics that could benefit both the industry and Avid. And we still have work to do, most notably accelerate our Tier 3 go-to-market strategy, complete the cost optimization projects and complete the final phases of the Avid Everywhere technology platform. Now, we tie the end of the transformation to the completion of three specific events, the roll-off of the impact of the non-marketed products, the completion of the cost the specific cost optimization projects that we've discussed and the roll-off of the pre-2011 deferred revenue in all material respects. Now, we should completely be transitioned off of the impact of the non-marketed products by the end of 2015. We expect to be largely done with our specific cost optimization projects by the middle of 2016. And by mid-2017, the pre-2011 revenue will be reduced to an immaterial amount. After these events, we plan to begin a phase of focusing on sustainable and profitable growth. Let me review some of the examples of the financial and operational progress that we've had since the beginning of the transformation. We've seen good progress on our new products and platform adoption, as evidenced by the 9% constant currency bookings growth this quarter over the prior year. And this shift to newer and what we have seen as more profitable products has contributed to an increase in gross margins overall. However, this has been muted by the impact of the non-marketed products, which we expect to have about a $12 million impact this year, and the pre-2011 amortization of deferred revenue, which is expected to have about a $34 million impact this year. At the same time, the percentage of recurring revenue bookings has accelerated faster than expected with increased visibility, but has also put downward pressure on near-term revenue and cash. And while we've been investing in the transformation, we've reduced our trailing 12-month organic non-GAAP operating cost by 2% year-on-year through a very targeted set of cost optimization programs. As mentioned, these cost optimization programs should largely be completed by mid-2016. As you know and as we've discussed, transformations are difficult to measure over short periods and the accelerated shift in recurring revenues is a good example of something that's difficult to predict. This has not been a significant area of focus for Avid historically and our preliminary efforts have increased recurring revenue bookings by 42% year-on-year. More dramatically, webstore sales have increased by 57% over the same period. You may be familiar with the impact on the short-term revenue that other vendors who have transitioned from a perpetual license model to a subscription model have experienced such as Adobe and Autodesk. And as John will review, we expect that this transition to higher recurring revenues will not create as much downward pressure for Avid as it has for others and also should have a significant upside due to the relatively low maintenance adoption rate that Avid has had historically. As you've seen from our earnings release, we have revised our guidance down for the remainder of 2015. John will review the changes in more detail shortly. But at a high level, there were three primary drivers. First, we've initially focused more on Tier 1 and 2 and less on Tier 3 and our audio business. As a result, we have not experienced the pace of traction within those market segments that we expected. Second, the shift to recurring revenues has been higher than planned which, as I mentioned, has a near-term impact. Finally, our recent bookings mix has been more heavily weighted internationally, and as a result, we've experienced more currency pressure. Again, John will review the guiding bridge shortly, but I wanted to share some context for that change with you. As we discussed in the transformation slide, as we complete our targeted cost optimization projects, the impacts on the non-marketed products and pre-2011 revenue headwinds burn-off and the recurring revenue impact should shift from having a mixed impact to what we expect to be a positive impact, at this point, we believe we will be in a better position to drive sustainable and profitable growth. Finally, we've made some key additions to the executive leadership team that you may have read about to help us get to the end of the transformation and put us in a better position to focus on sustained profitable growth. During this past quarter, we completed the executive leadership team with the hiring of our new Chief Marketing Officer, Chief Technology Officer and the Chief Product Officer. Our new CMO, Kyle Kim-Hays joins us with over 20 years of leadership experience in marketing, product management and engineering at Warner Bros. and Microsoft before his most recent assignment as the Head of Digital Content Delivery Marketing at Verizon. Rashid Desai, our new CTO, joins us with over 20 years of leadership experience in product engineering and technology solutions for large enterprise and consumer level businesses. Rashid has worked closely with John and me at Open Solutions, where he was our CTO, and he's joining us from Barclaycard, where he was their CTO and CIO. Lastly, our new Chief Product Officer, Dana Ruzicka, is a 20-year veteran of Avid and has held various leadership roles within the company spanning product development, marketing, business development and alliances, and strategic development. As I mentioned, Kyle, Rashid and Dana complete the upgrade of our executive leadership team, and I believe we have a world-class management team with the right experience to complete this transformation and get us to the other side. I already shared the background of our newest members, but we also have former executives from Adobe in Rick Lowenstein, Apple in Bruce Yaung, not to mention Jeff Rosica, who ran one of our competitors in the broadcast space before joining us here. This is a team that John and I believe matches up against anyone in the industry, and I look forward to some of you having a chance to meet with some of these team members at our Investor Day next Tuesday. Now, based on what I'm seeing in the industry and our progress, I'm as excited as ever as Avid's platform-based strategy is clearly resonating with our customers. We believe this dynamic sector shift in what is already a very large and growing market is opening up significant opportunities for those vendors best situated to help connect content creators and consumers in the most efficient and elegant way. Avid, as you probably know, has a strong heritage as a trusted market leader with a unique open platform to address the needs of both traditional customers and those to the new media space, not to mention the largest most successful media enterprise in the world all the way down to the independent professional. We inherited a company with a rich history, but one that needed to make significant changes moving forward. Transformations, by their nature, can be complicated and require tremendous effort, intensity and urgency. I think we've made some important strides to move in the right direction, as evidenced by some of the results we highlighted. But there's clearly more work to be done. We have a clear path to complete the transformation and are anxious for a time when our progress will not be muted by the headwinds that I discussed. At that time, we believe efforts will convert more directly to an attractive financial expression and drive long-term value to our shareholders. Now I'd like to hand the call over to John to go over our quarter's financial results in greater detail. John?

Thanks Louis. As you just heard, the team here at Avid is working hard to capitalize on the opportunities ahead of us post-transformation. In the meantime, we still have much work to do. Louis just mentioned some of the higher level drivers of the adjustment in our guidance, and I'll get into more detail shortly on how we see the rest of 2015. But first, given we're roughly halfway through the transformation, I think it's important to review our financial progress thus far since we began the transformation. I'll also review our more recent Q3 results. I'd like to refer back to something Louis shared earlier. Given where we are in the transformation, there are some dynamics that are providing lift for Avid and some that are providing headwinds. And I'll run through a few of these key metrics now to try to put all this in perspective. We talk frequently about the stabilization of bookings, improving margins and platform adoption as key goals for the company. So let's take a look at what the metrics tell us. As a frame of reference, our bookings were declining by compound annual growth rate of around 11% in the two years leading up to the beginning of the transformation. While bookings overall have grown 2% since that point, marketed bookings have grown 9% on an LTM basis. As a reminder, our marketed products include a number of products from our portfolio that we believe drives the highest margins. And you'll see favorable margin mix reflected in our gross margin improvement of 170 basis points since 2013. Louis also touched upon the progress in platform adoption earlier, as we surpassed over 28,000 licenses deployed compared with less than 5,000 just two years ago. We believe this speaks to the adoption of the Avid Everywhere vision and informs you the cross-selling opportunities. As we rationalize our product portfolio and deemphasize those products in lower growth areas or lower margins, it's created near-term drag on revenue growth of approximately $30 million. However, we've effectively sold through nearly all of the non-marketed products and the headwind will be less impactful going forward. This headwind, however, pales in comparison to the nearly $80 million of revenue headwinds from the pre-2011 deferred revenue that's rolled off since Q2 2013. Thankfully, 2016 will be the last year of any material amounts of pre-2011 deferred revenue reflected in our results. We've talked a lot recently about the shift to a more recurring revenue model. You'll see here that the percentage of total bookings in the trailing 12-month period that are recurring in nature have increased meaningfully from when we started the transformation in 2013 from just under 20% to about 32% in this last LTM period. And revenue backlog for transactions entered into after 2010 have grown by 16% since September 2014, reflecting improved future revenue visibility. As a reminder, this shift does have a material adverse near-term impact on cash flow, revenue and adjusted EBITDA. We've also seen steady growth in our number of subscribers. The reason subscriber growth is meaningful is very straightforward. Support attach rates on Tier 3 perpetual license purchases of our creative tools after the first year is very low, say single-digits. Conversely, all of our subscription offerings include support. Thus, support attach rates increased to 100% from single-digit of attach rates in the perpetual model. Putting aside subscription churn, this means that over a five-year time horizon, we should be able to more than double the lifetime value of a customer. On the cost side, non-GAAP operating expenses have been reduced by about $24 million in less than three years with more expected in the coming 12 months as we complete our cost optimization projects. In summary, the results to-date suggest the transformation is having the desired effects, bookings have stabilized, new products are growing, platform adoption is increasing, recurring revenue is improving long-term visibility and as well costs are coming down and margins are expanding. As Louis touched on earlier, once these headwinds burn off and growth, margin expansion and cash flow conversion are unencumbered by this drag, we're excited about what the financial expression might look like. Given our investments in the platform, some have asked us what a financial model might look like post-transformation, so here we're providing a view. This model assumes annual market growth rates of 2% to 3% and gives effects to workflows going fully IP-based, for example software only. We believe we can outpace the market growth rate by a factor of 2 and get to 4% to 6% annual growth rates, generate non-GAAP gross margins in the low to mid-70%s, which could convert to an adjusted EBITDA margin of close to enterprise software levels, at 28% to 32%. So what we're really excited about is the possibility of converting 70% to 80% of our adjusted EBITDA to free cash flow, as you'd expect with this sort of model. Turning to the Q3 results. Quarterly bookings grew approximately 3% year-over-year to $115.1 million. However, if we were to remove the effects of the stronger dollar, bookings on a constant currency basis, labeled CFX on this chart, grew to approximately $121 million, an increase of approximately 9% year-over-year. Further, if we were to look at our constant currency bookings performance for our marketed products, they grew by 12% over the same period in the prior year. During Q3 2015, bookings growth was driven by strong sales from those products we launched earlier this year, including the ISIS 1000 Storage, S6L consoles, DNxIO interfaces and, more importantly, growth in recurring revenue bookings. Furthermore, we saw the continuation of bookings growth coming from our EMEA and APAC regions, which accounted for 56% of our bookings, helping to offset some of the pressure that we felt in North America. Lastly, our quarterly web sales exhibited annual bookings growth of over 50% in the quarter. However, even with the strong growth in webstore sales, Tier 3 bookings were less than planned, especially for audio products, despite our marketing efforts late in the quarter around pricing and product bundling. As we make the connection to the platform clearer for our audio customers and roll-out relevant solutions aimed at the Tier 3 base, particularly around collaboration and the marketplace, we expect bookings to materially improve. At this point, we think we're about two to three quarters behind where we expected to be for Tier 3 progress, but have a number of planned releases in the roadmap that will specifically address this [inaudible] (27:19). We also had a slower start in our newly acquired Orad product lines. While costs have been coming out roughly as expected, the Orad results for bookings and revenue were below plan for the quarter, which we believe is related to lower pre-acquisition pipeline building and post-acquisition integration-related disruption. Based on our initial observations, we're moving directly to the final state sales organization rather than in a phased approach. We believe this will address the initial poor bookings performance. Overall, we believe the thesis for this acquisition remains solid once the integration is complete. On an LTM basis, constant currency marketed bookings grew by 4% year-on-year to $515 million. Recurring revenue was 32% of bookings for the LTM period versus 22% in the same period in the year-ago period. Now turning to the operating results, starting with revenue, Q3 revenue was $137.4 million, which is 4% lower compared to Q3 2014. However, when you adjust for currency, revenue was essentially flat. As a reminder, during the quarter we faced an $8 million year-on-year headwind from the burn-off of pre-2011 deferred revenue from our restatement. But the good news is this headwind continues to diminish over time. More than offsetting this was the accounting expression from changing our business practices to eliminate free support for our Media Composer software, which added about $13 million to revenue. We describe this in more detail in our 10-Q. On a sequential basis, revenue increased 25% even with roughly $2 million less pre-2011 deferred revenue in the quarter. Timing of revenue recognized from period-to-period is inherently choppy. For instance, during Q3 2014, we had the benefit of shipping our new studio console, the S6, which added $13 million to revenue in that period. Comparatively, our S6 Live consoles won't begin shipping until Q4 and, in fact, should begin shipping as early as tomorrow. We have approximately $17 million of backlog associated with that product. During Q3, we also achieved historically high gross margin levels of nearly 65.4%, which is a 245 basis point improvement as compared to the prior year and a 470 basis point sequential improvement. This is driven primarily from the improved revenue mix, including the acceleration of deferred revenue from Media Composer 8, as well as lower overhead expenses related to our cost optimization programs, all of which were partially offset by the lower amortization of pre-2011 deferred revenue. Non-GAAP operating expenses during the quarter were $68.2 million, up $1.8 million year-on-year and effectively flat sequentially, driven by the addition of expenses from the Orad product line. Excluding Orad, quarterly operating expenses were down both year-on-year and sequentially, as we continue to see the flow through of cost optimization projects, including ongoing wage rate arbitrage and facilities rationalization projects. Adjusted EBITDA for the quarter was $25 million, down from $27.3 million in the same period a year ago, which included roughly $8 million less amortization of pre-2011 deferred revenue and negative currency headwinds of approximately $700,000 as the dollar strengthened versus the prior year. As a reminder, more than half of our revenue is derived from non-USD regions outside of the U.S. Helping to offset much of these headwinds during the quarter included the accounting impact of the discontinuance of implied PCS for Media Composer 8. Lastly, as I mentioned, we continued to see the benefits for cost optimization projects. Sequentially, adjusted EBITDA increased by approximately $24 million, driven primarily by the same factors that influenced the sequential revenue increase. Adjusted free cash flow in Q3 was a use $10.6 million, approximately $19 million more than a year ago period – sorry, less than a year ago period and $21 million better sequentially. You'll see on this page we've attempted to bridge our year-over-year cash flow performance to the relevant period a year ago. At a high level, the bookings mix shift to more recurring revenue, the timing of new shipments of – sorry, the timing of shipments of new products, primarily the S6L console, and lower Tier 3 audio bookings were key drivers of the year-over-year reduction in free cash flow. The mix to proportionately higher amounts of recurring revenue bookings have been a continuing feature of our performance with the shift happening faster than we anticipated. It provided future revenue visibility, but as you can see, negatively impacts near-term cash flow. As it relates to the variance attributable to the timing of new product shipments, we anticipate beginning to ship our new S6L console tomorrow. So we expect the variance to be a positive factor in Q4. And in fact, we expect to ship and then cash convert between $10 million and $12 million of our $17 million S6L backlog during the fourth quarter. And as you heard me mention earlier, our lower Tier 3 audio bookings, even with strong webstore sales, were less than planned despite our marketing efforts late in the quarter around pricing and product bundling. We'll be able to assess the success of our changes in bundling and packaging and pricing around audio made near the end of Q3 and after we get the full quarter effect of these adjustments, we'll be able to provide a bit more feedback. But initially, we're encouraged by some of the early customer feedback. We think we're about two to three quarters behind where we expected for Tier 3 progress and have a number of planned released in the roadmap that will specifically address this set of customers. Adjusted free cash flow for the year-to-date period was a use of $38 million, approximately $34 million more than the year-ago period. Thematically, the same issues impacting the quarter are present in the year-to-date period. We expect to be cash flow positive in Q4, in no small part reflecting the anticipated shipments of a significant portion of our new product backlog, which at the end of the quarter aggregated $22 million. So with that, let met turn to the balance sheet. At the end of Q3, we had total liquidity of about $45 million, which includes $22 million of cash on hand and about $23 million of uncommitted funding under our cash flow revolver. In July, we spent $8 million to buy back shares in the open market. We remain compliant with all financial covenants within our credit agreement. And lastly, at the end of Q3, the balance sheet carrying value of $125 million par convertible debt note was $95 million. As of quarter-end, our accounts receivable was $57 million with DSO at 37 days versus 36 days in the same period last year. Inventory at quarter-end stood at $48.8 million, which is up $5 million sequentially as we prepared to ship our new S6L console. Deferred revenue for transactions post-2010 was $327 million at the end of Q3 as compared to $313 million for the prior period. Revenue backlog was $513 million on September 30 versus $508 million in the year-ago period. If you remove the pre-2011 deferred revenue, you'd see that revenue backlog was $475 million, up 17% year-on-year. I'll shift now over to our updated guidance for the remainder of 2015. As with any transformation, the process is inherently difficult and the resulting financial expressions are often volatile, making it difficult to judge the transformation's progress over short periods. And really this is the exact reason why we provide annual guidance and have been diligent in updating the guidance with each passing quarter as business visibility improves. Not surprising given the radical shift in the media sector right now, the near-term volatility is compounded. Last quarter we provided a guidance bridge to help investors understand how we expected to get from our first half results to our full-year guidance. And as a way to help explain the changes in this guidance, we provided an analysis of the changes in those bridging items for each category. What you'll see is we expect to perform as anticipated for new products, cost optimization projects and the accounting impact of improved business practices as well as seasonality's impact on the income statement. We're lagging in Tier 3 in the audio space as we already discussed, and although we're seeing some early traction with the new [indiscernible] release, we don't believe it will be sufficient to close the gap for the full-year. Additionally, the mix shift to recurring revenue continues to be happening sooner than we anticipated. This ongoing transition to more recurring revenue via longer term support agreements is providing current period headwinds in revenue and cash flow, as revenue should get recognized over the life of the agreement and cash flow should be collected over that same period. Similarly, the shift to a subscription model versus the perpetual license model of our creative tools also are expected to have a near-term muting effect on revenue and cash flow. But unlike maintenance contracts, the impact of bookings is immediate given the inherent economics of the subscription versus perpetual. We also continue to seeing more complex and strategic sales discussions which takes longer to sign and close. But more recently, we've seen a continued trend of deals closing during the last week or even the last days of any given quarter, which affect the timing of cash flow conversion. We adjusted our full-year constant currency bookings guidance to a range of $510 million to $523 million, a decrease of $20 million to $27 million. We reduced our 2015 as-reported bookings range to $490 million to $503 million, a decrease of $19 million to $25 million. Similarly, our updated revenue guidance range of $512 million to $520 million reflected a reduction of $26 million to $30 million. The adjusted EBITDA range of $55 million to $60 million was revised lower by $19 million to $20 million. Lastly, the adjusted free cash flow range has been updated to be a use of $26 million to $35 million for the year, down from a source of $12 million to $20 million previously. The updated guidance also includes reaffirmation of non-GAAP gross margin ranges of 61% to 62% and an improvement in non-GAAP operating expenses to $270 million to $275 million. We give annual guidance because transformations are inherently volatile. Notwithstanding that, the underlying trends give us confidence that once the transformation is over and the headwinds have subsided, we should generate sustainable profitable growth with favorable cash flow characteristics. With that, I'll turn it back over to Louis for some closing remarks.

Thanks John. In closing, we've embarked on a pretty intense and comprehensive transformation with a company who has a rich heritage in the media industry, but faced some significant challenge. It's been a lot of work so far, but we feel like there's clear evidence that our strategy is working and aligned with market trends. The growth in the marketed products platform adoption, a lower cost structure and a increased recurring revenue are all encouraging signs, despite them being muted by the non-marketed products and the pre-2011 revenue amortization. We've made progress in almost every aspect of the company from our vision, leadership, organizational changes, product strategy, delivery and our cost structure, but there is more to do. Completing the transformation will continue to require tremendous effort, intensity and urgency, as I mentioned earlier. But we have a clear path to the end, where our progress should not be muted by the headwinds that we discussed. And once we get there, we believe we'll be in a place so we can focus on creating sustainable profitable growth with a much more attractive financial model. As always, I want to thank you for your support and I look forward to seeing you at our Investor Day next week in New York City. At this time, I'd be happy to take questions. Operator?

Thank you. [Operator Instructions] We'll now take our first question from Steven Frankel with Dougherty.

Good afternoon. So, the last several quarters had been characterized by bookings that slipped out at quarter-end that were then signed early in the following quarter. What happened in Q3 in regards to that?

Well, we continued to see kind of a normal sort of volume pattern. When I say normal volume pattern, it really is characterized by bookings closing fairly late in the quarter. And really in the end, I think with the CFX bookings at around $121 million, that was a fairly typical quarter, although we did have aspirations for a higher result. We were really expecting something closer to about $132 million, $133 million on the quarter, which is why you see us adjusting our free cash flow guidance.

But in terms of bookings overall or the win rate, if that's what you're asking about, we continue to see the trend where deals that slipped over we signed at a pretty high way. I think our win rate is still extremely high. We're not losing deals. And the big issue on bookings, as you know, which was up for the market price 9% on a year-over-year basis, constant currency basis. We are pretty pleased overall, even though we wanted more. But relative to what you've seen in the market, I think we're demonstrating that we're taking share. Those deals have still closed. Our win rate is still very high. The big feature is that there's been a mix shift. That mix shift that we saw is continuing towards our current revenue bookings.

And what was maintenance in the quarter?

Maintenance revenue or maintenance bookings?

Both. If you could give me both, that would be helpful.

Bear with us for just a moment. If you have any other questions, why don't you go to the next one and we'll get the maintenance number.

Yeah, so the next one is, traditionally, Avid has benefited by a big Q4 budget flush by its broadcast customers. Given the current environment, given what's going on in your business, what are your expectations around year-end budget flush this year?

We continue to believe that there is going to be a fair amount of seasonality that reflects that budget flush. In fact, our view on the seasonality really hasn't changed much from a bookings perspective since we last gave guidance back in August.

I think the new piece is probably what could happen on the recurring element piece and in Tier 3, which has been underperforming what we'd hoped despite its pretty significant growth year-over-year. So the traditional excess budget that might be flushed out at the end of the year is really mostly a Tier 1 phenomenon, a little bit in Tier 2 and really not in Tier 3. But I think the way you would think about it and the way we're going to increasingly think about it next year when we get all the engines turned on is there's buying behaviors for Tier 1 which are expanding and we're trying to capture more wallet share with more products. In Tier 2, there's less of that year-end pop, although it will happen and the packaging and bundling has to get tighter there. Then in Tier 3, we're really only beginning and we're behind where we wanted to be. And you're seeing that come through mostly in the recurring revenue elements, both for Tier 3 and then also on the service agreements in Tier 1. So just to clarify that that's mostly a Tier 1 phenomenon.

A couple more questions.

Please go ahead.

You had anticipated shipping a material amount of ISIS 1000 in the quarter. Yet given the revenue shortfall relative to expectations, did that not happen?

No, so we had about $27 million total bookings associated with those three new product lines. We shipped about $5 million in the quarter. We've got about $22 million of backlog going into Q4. So really it's been more of a function of just timing of shipments in the quarter.

Okay. And then could you give us the breakout between video and audio in terms of revenue in the quarter?

Yeah, bear with me. Going back to your other question on bookings, the support bookings in the quarter were about $31 million and the support revenue in the quarter was about $40 million. Audio revenue, I'll get you that number in just a moment.

How about the next question, Steve, and he'll look that up.

So in terms of Orad, obviously you had a slip there. How long do you think it takes to get that business back on the slope that you thought you were going to have when you acquired it?

We were anticipating that we'll make pretty good progress and get back pretty close to the acquisition thesis in fourth quarter and certainly be fully ready by Q1.

Okay. I think once I get the audio/video split, I think I'll be good for now.

Okay. Video products for the quarter was $62.9 million and audio was $26.1 million. You can find that on page 23 of the company's 10-Q.

Thank you.

And we'll now take our next question from Hamed Khorsand with BWS Financial.

Hi. I just want to get an understanding here. In prior quarters, when you were talking about the shift to recurring revenue, there was a lot of commentary around Tier 3 customer focus. What happened during the quarter that you were more focused on the Tier 1 customers from an industry standpoint that there was still slippage as far as the focus on Tier 3?

Hey, thanks for the question. This is Louis. First, I'll remind you that the subscription and recurring revenue in general was up fairly significantly and webstores is up fairly significantly as well, but we had higher expectations than what we had delivered, just to be clear. So we know that the numbers we gave you, some might scratch their head, that was pretty significant growth, but we had higher aspirations. In terms of what happened, as we were coming through some of the decisions we had to make early in the quarter, we really had to decide where to place the emphasis upon some of those new products that needed to be shipped and launched in Tier 1 and Tier 2 and some of the emphasis in Tier 3. We decided to emphasize Tier 1 and Tier 2 on some of those investments, which is I think why you've seen the Tier 1 and 2 bookings really driving our overall bookings growth. We still, though, had some packaging and pricing programs which we felt would make up for the lack of investment carrying us through and essentially get us some time to reinvest in those areas. As John mentioned, we're two to three quarters behind where we wanted to be, overall we think because of the lag in the investments that we'd made. But we had hoped that some of the pricing and packaging, which was the driver of the increase, but not as significant as we had hoped. And really that's what happened. We had to make a management decision. If you look at platform sales overall, more are tied to Tier 1 and Tier 2 clients. And so when we had to decide where to deploy resources for some of the inevitable intensity of effort, right when some of these new products being launched, we decided to emphasize the Tier 1 and Tier 2 client benefits and that was at the expense of some of the Tier 3 areas of focus.

Okay. And then is it that expectation that you're expecting the higher growth in Q3 that you're lowering guidance on adjusted EBITDA because we were going off on a small base to begin within the first half. So what changed that you had to lower the guidance now?

Yeah, so really from a revenue and bookings guidance perspective, the primary fundamental was Tier 3 and audio almost exclusively. And it really had to do with our focus really predominantly on Tier 1 and Tier 2. When we kind of started this, and you brought up a point which I think was a good point, we were very excited about the Tier 3 market and we continue to be so. It's a $1.8 billion market. So we see it as a pretty large opportunity. But having said that, we feel like we really need to finish up our work around collaboration and the marketplace to really have a meaningful audio platform to really address the market, and our guidance reflects that elongated investment cycle. We think we'll be – done a lot of that work in Q1 and Q2 next year.

All right. And my last one is you're – it sounds like you're downplaying the broadcast and traditional markets. Your competitor was saying that they were benefiting from that side of the business this past quarter. What's the difference between the commentary of the two companies?

I think as Louis – and I'll let Louis make some comments. But as he made some opening remarks, where you're at in the value chain really matters and certain people participate in a more meaningful way at different cycles in the investment cycle.

Yeah, I got that commentary. But it just sounds like your competitor is saying they're doing well and then you're downplaying broadcast and talking about new media and less traditional. And then you're talking about reducing guidance for Q4 and so forth. So, I'm just trying to get an understanding of why there's discrepancy here between the two companies that are competing against each other?

Yeah. What we're trying to clarify is you've seen those large traditional competitors – I don't have the slide up, but I think it was off 23% in revenues for the quarter. And we are just distinguishing between that and using the example of broadcast technology. If you're in sports and news in broadcast, that's still a very important area. But as you know, because of the ad yield rates and the ad conversion rates on all broadcast for all industries, because viewership keeps dropping on those traditional distributors, that most folks are making an adjustment to that side of the value chain. And so, I think the point was media as a segment is a great area to be because everything is going up. Content creation is going up, content consumption is going up and distribution is going up. Budgets are also going up, but they're going up a smaller amount than the first three variables. And what that means is depending on where you are and where you start from and how quickly you've adapted, you're going to see either pressure on your budgets if you're a large media company and increase in other budgets. And then you're also going to see – if you're a vendor, depending on where you are, you're also having to see that adjustment. So there are certain vendors – let's say you're in cabling or SGI technologies. That's being replaced and moving to IP. So, if you're a traditional vendor and traditional broadcaster on those tools, you're probably seeing some pain. And those legacy vendors we gave the example of, that was just from their recent releases. They were down 23% on average and we are just trying to distinguish between, while all of these guys are great companies, some are growing faster than others. And if you look at the folks who have the luxury both in the media and also vendors of only participating in the higher growth areas, you're seeing higher growth rates. And Avid, which I think many would view, because we've been around for 26 years, as a strong heritage brand, the reason we're kind of in the middle is because Avid Everywhere has allowed us to both participate in the areas where there's more cost pressures, which we believe we can show a pretty dramatic ROI, even though those budgets aren't growing, we believe we're capturing share there. But we can also participate in some of the higher growth areas like the media asset management, production asset management, some of the distribution technology, as well as our subscription services. And so, that's what the distinction we were trying to make. But I think the reason we wanted to distinguish and the reason we used the example of broadcast is most in the industry see traditional broadcasting under a lot of pressure, because of the ad conversion rates and overall viewership. When you see companies like – even ESPN recently with a major lay-off, that's an example. Now, by the way, ESPN in the same release is making significant investment in all their digital assets. And I see that – I think we've talked before, I'm all – I was on a 5.5-week road trip and I – all the broadcasters I talked about were talking about this transition, where even though the broadcasting platform is a larger piece of the revenue and they can't afford to abandon it, they have make the cost structure more efficient, because of the realities of viewership and ad conversion rates. At the same time, they still have very valuable content and they're investing heavily in all of the ways to monetize that content outside their traditional terrestrial distribution networks. And that's really what we're seeing happening. And so, depending on – there could be folks in traditional broadcast technologies who are still doing well, because they're in a piece that's still in demand, especially I would say sports and news. Those are two areas that increasingly are important. They've always been important. They're more important now, because they're really unique asset for a traditional broadcaster. Almost everything else, as you've seen, because of the viewing patterns, you're seeing those numbers drop and they're gaining in some of our other clients. Like we mentioned, the new media companies where we're actually stronger, those are also our clients and they don't have the burden of dealing with the traditional heritage cost structure. They simply get to invest in newer tools and monetize great content that they're creating. And so, that was the distinction we were trying to make. And we can't speak for others. We're just speaking for what both the research shows and what we're experiencing in the market.

Hey Hamed, this is John. I was curious, which are the – I want to make sure we're answering the question as completely as we can. Which of the competitors were you thinking about in terms of relative comparable?

Belden.

Belden? Okay.

Appreciate it. Thank you.

Thank you.

And ladies and gentlemen, it appears there are no further questions at this time. So I'd like to turn the conference back over to Mr. Jonathan Huang for any additional or closing remarks.

Well, thank you everyone for joining our call today. We certainly look forward to speak with you soon and seeing many of you next week at our Investor Day in New York City. Have a good night.

And ladies and gentlemen, that concludes today's conference call. We thank you for your participation.