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Press release from CNW Group

Sandvine Reports Q1 2012 Results

Thursday, April 05, 2012

Sandvine Reports Q1 2012 Results07:00 EDT Thursday, April 05, 2012WATERLOO, ON, April 5, 2012 /CNW/ - Sandvine, (TSX: SVC) (AIM: SAND) a leading provider of intelligent network policy control solutions for fixed and mobile operators, today reported $20.1 million in revenue for its first quarter of 2012 and a net loss of $6.5 million, which included a $3.7 million inventory write-down related to one of the Company's older hardware platforms. All results are reported in U.S. dollars under International Financial Reporting Standards (IFRS).Q1 2012 highlights:Revenue by access technology market: DSL 22%; wireless 26%; cable 48%; other 4%Revenue by geography: NA 58%; EMEA 17%; APAC 18%; CALA 7%Revenue by sales channel: reseller 39%; direct 61%Gross margin was 54%. The $3.7 million inventory write-down negatively impacted gross margin by 18 percentage pointsCash, cash equivalents and short-term investments balance: $74.1 millionSoftware order value for Business Intelligence solutions exceeded that for the Company's traditional Traffic Optimization solutionsLaunched the latest version of Fairshare Traffic ManagementSeven new customers: three fixed wireless; two converged operators, one mobile customer and one DSL operatorWon expansion orders of over $7 million from a Tier 1 US cable operator"Business Intelligence was a major driver behind the multi-million dollar orders from Tier-1 US cable operators in the previous two quarters. We are focused on increasing our value to our installed base by continuing to lead the market with innovative solutions. We continue to expect revenue growth in 2012," said Dave Caputo, Sandvine's President and CEO.FINANCIAL HIGHLIGHTS (All amounts are in U.S. dollars)      Millions of dollars, except per share data and where otherwise indicatedQ12012Q42011ChangeQ12011ChangeRevenue20.120.9-4%19.25%Gross Margin percent254%72%-18pp70%-16ppExpenses17.217.6-3%15.89%Net Loss2(6.5)(2.1)(4.4)(2.7)(3.8)Diluted Loss Per Share2(0.047)(0.015) (0.020)       Non-IFRSExpenses116.517.0-3%15.29%Non-IFRSLoss1, 2(5.8)(1.4) (2.0) Non-IFRS Diluted Loss Per Share1, 2(0.042)(0.010) (0.015) 1 See Table 1 below regarding non-IFRS financial measures2 Q1 2012 figures include $3.7 million ($0.027 per diluted share) related to an inventory write-downCONFERENCE CALLThe Company will discuss the financial results and business outlook on a conference call at 8:30 a.m. Eastern time (1:30 BST) today. A webcast will be available on Sandvine's website.Local dial-in number416 644 3414Toll-free North America877 974 0446Toll-free United Kingdom0800 358 5256A replay of the call will be available at 416-640-1917 or toll-free at 877-289-8525 (passcode 4524136#) from approximately 10:30 a.m. Eastern time today through April 12.ABOUT SANDVINESandvine's network policy control solutions focus on protecting and improving the quality of experience on the Internet.Our award-winning network equipment and software helps DSL, FTTx, cable, fixed wireless and mobile operators better understand network traffic, manage network congestion, create new services and revenues, mitigate traffic that is malicious or undesirable to subscribers, deliver QoS-prioritized multimedia services and increase subscriber satisfaction. With over 200 service provider customers in more than 85 countries serving hundreds of millions of broadband and mobile data subscribers, Sandvine is enhancing the Internet experience worldwide. For more information, please visit www.sandvine.comCAUTION REGARDING FORWARD LOOKING INFORMATIONCertain statements in this press release which are not historical facts constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Statements related to Sandvine's projected revenues, earnings, growth rates, revenue mix and product plans are forward-looking statements as are any statements relating to future events, conditions or circumstances. The use of terms such as "may", "anticipated", "expected", "projected", "targeting", "estimate", "intend" and similar terms are intended to assist in identification of these forward-looking statements. Readers are cautioned not to place undue reliance upon any such forward-looking statements. Such forward-looking statements are not promises or guarantees of future performance and involve both known and unknown risks and uncertainties that may cause the actual results, performance, achievements or developments of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements.   Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and the Company does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change.Many factors could cause the actual results of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements, including, without limitation, each of the following factors, and those factors which are further discussed in the Company's Annual Information Form ("AIF"), a copy of which is available on SEDAR at www.sedar.com.The Company's revenues may fluctuate from quarter to quarter and year to year depending upon sales cycles, customer demand and the timing of customer purchase decisions;The Company's gross margins may fluctuate from period to period depending upon a variety of factors including product mix in the quarter, competitive pricing pressures and the level of sales generated through indirect channels;The Company is dependent upon and expects to continue to derive a large percentage of its revenue from both a small number of key customers and key reseller partners, none of whom are bound to any fixed purchase commitment or exclusivity obligations and could change their buying patterns and/or source of supply at any time, which could have a material impact on the Company's revenues.  The Company's reseller partners may offer their own products which are competitive with the Company's products;The Company faces intense competition in markets where there are typically several different competing technologies and rapid technological changes.  The Company faces the risk of emergence of new technologies that may be either competitive to those of the Company or that change the requirements of the Company's customers for solutions such as those offered by the Company;The Company's growth is dependent on the development of the market for network policy control solutions and the decisions of the Company's target customers to deploy and further invest in those technologies, which decisions may be impacted upon by changing requirements in the area of broadband network management policies and/or changes in the regulatory framework to which the Company's customers may be subject.  In particular, numerous telecommunications legislators and regulators in various jurisdictions have considered or are considering what, if any, regulations might be appropriate with respect to how internet service providers manage the impact of different types of traffic on their networks.  These ongoing processes may cause uncertainty in the network investment decisions of the Company's target customers, and any new rules or regulations that result from these considerations may impact the demand for the Company's products within various markets, including markets that may not be considering any new regulation but where the Company's customers may look to other markets for future guidance or trends;The majority of the Company's operating expenses are denominated in Canadian dollars, U.S. dollars, New Israeli Shekels and Indian rupees. The Company's earnings are impacted by fluctuations in the exchange rates between the U.S. dollar and these currencies.Table 11. Non-IFRS Financial MeasuresThe following table provides a reconciliation of net income (loss) and related per share amounts to non-IFRS net income (loss) and the related per share amounts for the periods indicated.  These non-IFRS financial measures, which are used internally by management to evaluate the Company's ongoing performance, exclude the impact of stock based compensation and amortization of intangible assets acquired through business acquisitions (collectively referred to as "Non-IFRS Expenses").  The Company provides these non-IFRS financial measures as it is the Company's view that the Non-IFRS Expenses are either (i) affecting the comparability of results from period to period as the Non-IFRS Expenses are not part of its normal day-to-day operations or only impact the current or comparable period and/or (ii) represent a "non-cash" accounting charge that does not deplete its cash resources.  Accordingly, the Company believes that such financial measures may also be useful to investors in enhancing their understanding of the Company's operating performance.  These non-IFRS measures are not recognized under IFRS and do not have standardized meanings prescribed by IFRS.  Therefore it is unlikely to be comparable to similarly titled measures reported by other issuers. Non-IFRS financial measures should be considered in the context of the Company's IFRS results.                  Three month period ended   February 292012$November 302011$February 282011$ Amounts in US$ thousands    Net loss(6,487)(2,111)(2,694)   Adjustment for:        Stock compensation expense534489477     Amortization of intangible assets acquired through business acquisitions185185192Non-IFRS Net loss(5,768)(1,437)(2,025)      Three month period ended   February 29 2012$November 302011$February 282011$      Diluted earnings (loss) per share  (0.047)(0.015)(0.020)Impact on diluted earnings (loss) per share of Non-IFRS   measures  0.0050.0050.005Non-IFRS Diluted earnings (loss) per share   (0.042)(0.010)(0.015)Sandvine CorporationConsolidated Statements of Financial Position(in thousands of United States dollars, except share and per share data) (unaudited)  As at  February 29, 2012$November 30, 2011$December 1, 2010$Assets       Current assets   Cash and cash equivalents5,0462,95287,949Short term investments69,07771,030-Accounts receivable 24,97728,19425,485Inventory 14,06218,23011,268Other current assets3,6463,5863,201 116,808123,992127,903Non current assets   Plant and equipment12,02811,56011,866Intangible assets5,3135,8135,516Other assets511511511 17,85217,88417,893     134,660141,876145,796    Liabilities       Current liabilities   Trade and other payables9,40110,78712,208Current portion of deferred revenue10,9799,12310,136 20,38019,91022,344Non current liabilities   Deferred revenue866789598Other non current liabilities4,3776,8199,280 5,2437,6089,878     25,62327,51832,222Shareholders' equity       Share capital  120,246120,472119,399Contributed surplus13,48012,75410,999Accumulated comprehensive income (loss)  51(615)-Retained deficit(24,740)(18,253)(16,824) 109,037114,358113,574     134,660141,876145,796Sandvine CorporationConsolidated Statements of Income(in thousands of United States dollars, except share and per share data) (unaudited) For the three month period ended February 292012$February 282011$   Revenue  Product13,03013,492Service7,0685,691 20,09819,183Cost of sales  Product7,2084,240Service2,0951,430 9,3035,670   Gross margin10,79513,513   Expenses  Sales and marketing6,2986,170Research and development7,3066,478General and administrative3,0253,173Other losses (gains), net537- 17,16615,821   Loss from operations(6,371)(2,308)   Finance income (costs), net  Finance income4442Finance costs(132)(194)Foreign exchange gains (losses)(126)(196)Other finance gains (losses), net146-Finance income (costs), net(68)(348)   Loss before provision for income taxes(6,439)(2,656)   Provision for income taxes   Current4838   Net loss for the period(6,487)(2,694)   Net loss per share   Basic earnings per share(0.047)(0.020)Diluted earnings per share(0.047)(0.020)Sandvine CorporationConsolidated Statements of Cash Flows(in thousands of United States dollars, except share and per share data) (unaudited) For the three month period ended February 292012$February 282011$Cash provided by (used in)     Operating activities  Net loss for the period(6,487)(2,694)Items not affecting cash     Amortization of intangible assets538361   Depreciation of plant and equipment1,0961,061   Unrealized foreign exchange (gains) losses(237)423   Finance costs132194   Other finance gains (losses)(146)-   Stock-based compensation534477   Other583(51) (3,987)(229)   Changes in non-current balances(2,365)(65)Changes in non-cash working capital balances10,2936,562    3,9416,268   Investing activities  Purchase of plant, equipment and intangible software assets(1,728)(2,356)Purchase of short term investments(3,046)(113,218)Sale of short term investments5,00039,981    226(75,593)   Financing activities  Repayment of government grants(2,202)(2.373)Proceeds from the issuance of share capital80453Payment to cancel warrant(80)-    (2,202)(1,920)   Effect of foreign exchange on cash and cash equivalents12981   Net increase (decrease) in cash during period2,094(71,164)   Cash and cash equivalents - Beginning of period2,95287,949   Cash and cash equivalents - End of period5,04616,785   Cash and cash equivalents are represented by  Balances with banks5,01816,466Cash equivalents28319  For further information: INVESTOR RELATIONS CONTACT Rick Wadsworth Sandvine +1 519 880 2400 ext. 3503 rwadsworth@sandvine.com  MEDIA CONTACT Sacha DeGroot Sandvine +1 519 880 2232 sdegroot@sandvine.com AIM NOMAD Andrew Chubb/Simon Bridges Canaccord Adams Limited +44 0207 050 6500