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Press release from CNW Group

Sandvine Reports Q2 2012 Results

Friday, July 06, 2012

Sandvine Reports Q2 2012 Results07:00 EDT Friday, July 06, 2012WATERLOO, ON, July 6, 2012 /CNW/ - Sandvine, (TSX:SVC; AIM:SAND) a leading provider of intelligent network policy control solutions for fixed and mobile operators, today reported $18.6 million in revenue for its second quarter of 2012, a non-IFRS loss of $3.5 million and a net loss of $4.2 million. All results are reported in U.S. dollars under International Financial Reporting Standards (IFRS).Q2 2012 highlights:Revenue by access technology market: DSL 43%; wireless 30%; cable 25%; other 2%Revenue by geography: NA 48%; EMEA 18%; APAC 22%; CALA 12%Revenue by sales channel: reseller 47%; direct 53%Gross margin was 74%Cash, cash equivalents and short-term investments balance grew by $2.8 million to $77.0 millionWon three new customers, including a Tier-1 Asian telco and a Top-10 US telecom providerWon an additional expansion order of over $1.5 million from a Tier 1 US cable operator"Our second quarter revenue was consistent with the estimate that we provided in June," said Dave Caputo, Sandvine's President and CEO. "We continue to believe that we will soon be able to win some initial business related to opportunities with Tier 1 operators, globally, and conclude a global supply arrangement for a major multinational operator customer."FINANCIAL HIGHLIGHTS (All amounts are in U.S. dollars)           Millions of dollars, except per share data and where otherwise indicated Q22012 Q12012 Change Q22011 ChangeRevenue 18.6 20.1 -8% 24.5 -24%Gross Margin percent 74% 54%2 20pp 77% -3ppExpenses 17.9 17.2 4% 17.5 3%Net (Loss) Income (4.2) (6.5) 2   1.7  Diluted (Loss) Income Per Share (0.030) (0.047) 2   0.012  Non-IFRSExpenses1 17.2 16.5 5% 16.8 3%Non-IFRS (Loss)1 Income (3.5) (5.8) 2   2.4  Non-IFRS Diluted (Loss) Income Per Share1 (0.025) (0.042) 2   0.017  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 America800 814 4859Toll-free United Kingdom0800 358 5263A replay of the call will be available at 416-640-1917 or toll-free at 877-289-8525 (passcode 4545032#) from approximately 10:30 a.m. Eastern time today through July 13.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 forecasted demand or opportunity with any particular customer is subject to change and is not in any way guaranteed or committed and the ultimate timing of receipt of any orders from any such customer is uncertain as is the timing of when any such order may translate to revenue for the Company;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 1Non-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 endedSix month period ended May 312012$February 29 2012$May 312011$May 312012$May 312011$ Amounts in US$ thousandsNet income (loss)(4,166)(6,487)1,652(10,653)(1,042) Adjustment for        Stock based compensation expense5055345311,0391,008  Amortization of intangible assets acquired through business acquisitions185185192370384Non-IFRS Net income (loss)(3,476)(5,768)2,375(9,244)350                   Three month period endedSix month period ended   May 312012$February 29 2012$May 312011$May 312012$May 312011$        Diluted earnings (loss) per share(0.030)(0.047)0.012(0.077)(0.008)Impact on diluted earnings (loss) per share of Non-IFRS measures0.0050.0050.0050.0100.011Non-IFRS Diluted earnings (loss) per share (0.025)(0.042)0.017(0.067)0.003Sandvine CorporationConsolidated Statements of Financial Position(in thousands of United States dollars, except share and per share data) (unaudited)  As at  May 31, 2012$November 30, 2011$Assets       Current assets   Cash and cash equivalents 5,3702,952Short term investments 71,59771,030Accounts receivable  19,41828,194Inventory  12,30318,230Other current assets 2,4343,586  111,122123,992Non current assets   Plant and equipment 12,17311,560Intangible assets 4,7775,813Deferred tax asset 212-Other assets 511511  17,67317,884      128,795141,876    Liabilities       Current liabilities   Trade and other payables 9,43710,787Current portion of deferred revenue 9,6269,123  19,06319,910Non current liabilities   Deferred revenue 755789Other non current liabilities 4,1936,819  4,9487,608      24,01127,518Shareholders' equity       Share capital   120,411120,472Contributed surplus 13,90312,754Accumulated comprehensive loss  (624)(615)Retained deficit (28,906)(18,253)  104,784114,358      128,795141,876    Sandvine CorporationConsolidated Statements of Income(in thousands of United States dollars, except share and per share data) (unaudited) For the three month period ended For the six month period ended May 31, 2012$May 31, 2011$ May 31, 2012$May 31, 2011$      Revenue     Product10,97518,652 24,00532,144Service7,5995,853 14,66711,544 18,57424,505 38,67243,688Cost of sales     Product2,6963,865 9,9048,105Service2,1851,694 4,2803,124 4,8815,559 14,18411,229      Gross margin13,69318,946 24,48832,459      Expenses     Sales and marketing6,9315,927 13,22912,097Research and development7,7958,268 15,10114,746General and administrative3,1793,284 6,2046,457Other losses, net20- 557- 17,92517,479 35,09133,300      Income (loss) from operations(4,232)1,467 (10,603)(841)      Finance income (costs), net     Finance income2837 7279Finance costs(122)(180) (254)(374)Foreign exchange gains (losses)-1 (126)(195)Other finance gains (losses), net-369 146369Finance income (costs), net(94)227 (162)(121)      Income (loss) before provision for income taxes(4,326)1,694 (10,765)(962)      Provision for (recovery of) income taxes     Current5242 10080Deferred(212)- (212)-Provision for (recovery of) income taxes(160)42 (112)80      Net income (loss) for the period(4,166)1,652 (10,653)(1,042)      Net income (loss) per share      Basic earnings (loss) per share(0.030)0.012 (0.077)(0.008)Diluted earnings (loss) per share(0.030)0.012 (0.077)(0.008)      Sandvine CorporationConsolidated Statements of Cash Flows(in thousands of United States dollars, except share and per share data) (unaudited) For the three month periodended For the six month period ended May 31,2012$May 31,2011$ May 31, 2012$May 31,2011$Cash provided by (used in)           Operating activities     Net income (loss) for the period(4,166)1,652 (10,653)(1,042)Items not affecting cash       Amortization of intangible assets528569 1,066930  Depreciation of plant and equipment1,1801,075 2,2762,136  Unrealized foreign exchange (gains) losses318(71) 81352 Finance costs122180 254374 Other finance gains (losses)-(369) (146)(369)  Stock-based compensation505531 1,0391,008 Deferred tax recovery(212)- (212)-  Other(9)(34) 574(85) (1,734)3,533 (5,721)3,304      Changes in non current balances(304)160 (2,669)95Changes in non-cash working capital balances6,501(11,760) 16,794(5,198) 4,463(8,067) 8,404(1,799)      Investing activities     Purchase of plant, equipment and intangible software assets(1,353)(1,724) (3,081)(4,080)Purchase of short term investments(2,795)(84,697) (5,841)(197,915)Sale of short term investments27579,659 5,275119,640 (3,873)(6,762) (3,647)(82,355)      Financing activities     Repayment of government grants(122)(19) (2,324)(2,392)Proceeds from the issuance of share capital112149 192602Payment to cancel warrant-- (80)- (10)130 (2,212)(1,790)      Effect of foreign exchange on cash and cash equivalents(256)28 (127)109      Net increase (decrease) in cash during period324(14,671) 2,418(85,835)      Cash and cash equivalents - Beginning of period5,04616,785 2,95287,949      Cash and cash equivalents - End of period5,3702,114 5,3702,114      Cash and cash equivalents are represented by     Balances with banks5,3511,795 5,3511,795Cash equivalents19319 19319  For further information: INVESTOR RELATIONS CONTACT Rick Wadsworth Sandvine +1 519 880 2400 ext. 3503  MEDIA CONTACT Sacha DeGroot Sandvine +1 519 880 2232  AIM NOMAD Andrew Chubb/Simon Bridges Canaccord Genuity Limited +44 0207 523 8000