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Press release from CNW Group

Sandvine reports Q4 2012 results

Thursday, January 10, 2013

Sandvine reports Q4 2012 results07:01 EST Thursday, January 10, 2013WATERLOO, ON, Jan. 10, 2013 /CNW/ - Sandvine, (TSX: SVC); (AIM: SAND) a leading provider of intelligent network policy control solutions for fixed and mobile operators, today reported $27.5 million in revenue for its fourth quarter of 2012, non-IFRS income of $6.9 million and net income of $6.5 million. During the quarter the Company recorded a one-time, $3.8 million reduction in operating expenses for Ontario government funding related to its ongoing project under the Next Generation of Jobs Fund.Full year results included revenue of $87.9 million and a non-IFRS loss of $2.7 million (net loss of $5.0 million). All results are reported in U.S. dollars under International Financial Reporting Standards (IFRS), unless otherwise specified.Q4 2012 highlights:Revenue by access technology market: wireless 48%; DSL 35%; cable 17%Revenue by geography: NA 44%; APAC 26%; EMEA 18%; CALA 12%Revenue by sales channel: reseller 78%; direct 22%Gross margin: 71%Cash, cash equivalents and short-term investments balance: $74.6 millionAnnounced significant initial orders from new Tier 1 customers:A converged North American operator deploying service creation, business intelligence and traffic optimization solutions in the fixed and mobile networksA converged, multinational, Western European operator group deploying business intelligence and traffic optimization in the fixed line network of its home countrySince its Q3 results announcement, Sandvine has announced over $18.0 million in expansion orders from major existing customersWon nine new service provider customers."We are pleased with fourth quarter results as they demonstrate ongoing progress in revenue growth and profitability," said Dave Caputo, Sandvine's President and CEO. "Total revenue and wireless market revenue were at record levels, driven by large initial orders from two new Tier 1 customers and large expansion orders from major existing customers, which has been a key area of focus for us in 2012."FINANCIAL HIGHLIGHTS (All amounts are in U.S. dollars)      Millions of dollars, except per share data and where otherwise indicatedQ42012Q32012ChangeQ42011ChangeRevenue27.521.826%20.931%Gross Margin percent71%70%1pp72%-1ppExpenses12.916.8-23%17.6-27%Net Income (Loss)6.5(0.9) (2.1) Diluted Income (Loss) Per Share0.046(0.006) (0.015) Non-IFRS Income (Loss)1 6.9(0.4) (1.4) Non-IFRS Diluted Income (Loss) Per Share10.049(0.003) (0.010) 1 See Table 1 below regarding non-IFRS financial measuresCONFERENCE 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.  Toll-free North America(888) 771-4371Toll-free United Kingdom0808 238 9578A replay of the call will be available at (888) 843-7419 (passcode 33987244#) from approximately 11:00 a.m. Eastern time today through January 20.ABOUT SANDVINESandvine's network policy control solutions add intelligence to fixed, mobile and converged communications service provider networks to enable services that can increase revenue and reduce network costs. Powered by Sandvine's Policy Engine and SandScript policy language, Sandvine's networking equipment provides end-to-end policy control functions including traffic classification, and policy decision and enforcement across the data, control and business planes.  Sandvine's products provide actionable business insight, the ability to deploy new subscriber services and tools to optimize traffic while enhancing subscriber Internet quality of experience.Sandvine's network policy control solutions are deployed in more than 200 networks in over 85 countries, serving hundreds of millions of data subscribers worldwide, 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 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.  In addition, the Company extends credit to its customers and resellers by virtue of agreed upon payment terms and could be exposed to collection risk on its receivables particularly if any key customer or key reseller were to face financial challenges. The Company's reseller partners may also 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 Company has increased its dependence on certain third party sub-assembly manufacturers and any disruption in the operations or quality of those suppliers or any increase in expected lead times from those suppliers could result in lost or delayed revenue and/or reduced profits;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 either (i) affect 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 endedTwelve month period ended November 302012$August 31 2012$November 302011$November 302012$November 30 2011$ Amounts in US$ thousandsNet income (loss)6,466(851)(2,111)(5,038)(1,429) Adjustment for        Stock based compensation expense4334374891,9092,096  Amortization of intangible assets acquired through business acquisitions-61185431754Non-IFRS Net income (loss)6,899(353)(1,437)(2,698)1,421       Three month period endedTwelve month period ended November 302012$August 312012$November 302011$November 302012$November 302011$      Diluted earnings (loss) per share0.046(0.006)(0.015)(0.036)(0.010)Impact on diluted earnings (loss) per share of Non-IFRS measures0.0030.0030.0050.0160.020Non-IFRS Diluted earnings (loss) per share 0.049(0.003)(0.010)(0.020)0.010Sandvine CorporationConsolidated Statements of Financial Position(in thousands of United States dollars, except share and per share data) As at November 30, 2012$November 30, 2011$December 1, 2010$Assets       Current assets   Cash and cash equivalents3,9572,95287,949Short term investments70,67971,030-Accounts receivable 32,16928,19425,485Inventory 6,37818,23011,268Other current assets2,8683,5863,201 116,051123,992127,903Non current assets       Plant and equipment10,65411,56011,866Intangible assets4,4435,8135,516Grant receivable4,343--Deferred tax asset212--Other assets511511511 20,16317,88417,893     136,214141,876145,796    Liabilities       Current liabilities   Trade and other payables10,45310,78712,208Current portion of deferred revenue9,3509,12310,136 19,80319,91022,344Non current liabilities   Deferred revenue503789598Other non current liabilities3,8086,8199,280 4,3117,6089,878     24,11427,51832,222Shareholders' equity       Share capital  120,626120,472119,399Contributed surplus14,65212,75410,999Accumulated other comprehensive income (loss) 113(615)-Deficit(23,291)(18,253)(16,824) 112,100114,358113,574     136,214141,876145,796Sandvine CorporationConsolidated Statements of Income(in thousands of United States dollars, except share and per share data) Three month period endedTwelve month period ended  November 30, 2012$November 30, 2011$November 30, 2012$November 30, 2011$Revenue    Product19,95813,97258,59065,581Service7,5106,95929,34324,802 27,46820,93187,93390,383Cost of Sales    Product5,1103,98519,10216,520Service2,7731,9149,5106,699 7,8835,89928,61223,219     Gross margin19,58515,03259,32167,164     Expenses    Sales and marketing6,1516,59126,15924,701Research and development4,8168,04327,21431,594General and administrative1,8913,00410,84312,871Other losses, net39-606- 12,89717,63864,82269,166     Income (loss) from operations6,688(2,606)(5,501)(2,002)     Finance income4135147129Finance costs(104)(144)(484)(697)Foreign exchange gains (losses)60338(247)355Other finance gains, net-3321,229976Finance income (costs), net(3)561645763     Income (loss) before income taxes6,685(2,045)(4,856)(1,239)     Current provision for income taxes21966394190Deferred recovery of income taxes--(212)- 21966182190     Net income (loss) for the period6,466(2,111)(5,038)(1,429)     Net income (loss) per share    Basic income (loss) per share0.047(0.015)(0.036)(0.010)Diluted income (loss) per share0.046(0.015)(0.036)(0.010)Sandvine CorporationConsolidated Statements of Cash Flows(in thousands of United States dollars, except share and per share data) For the three month period ended For the twelve month period ended November 30,2012$November 30,2011$ November 30, 2012$November 30,2011$Cash provided by (used in)           Operating activities     Net income (loss) for the period6,466(2,111) (5,038)(1,429)Items not affecting cash       Amortization of intangible assets307541 1,7212,027  Depreciation of plant and equipment1,1201,319 4,6014,585  Unrealized foreign exchange (gains) losses(21)(37) (39)274 Finance costs104144 484697 Other finance (gains)-(332) (1,229)(976)  Stock-based compensation433489 1,9092,096 Deferred tax recovery-- (212)-  Other18(27) 572(90) 8,427(14) 2,7697,184      Changes in non-cash working capital balances(6,515)(366) 4,391(12,836) 1,912(380) 7,160(5,652)      Investing activities     Purchase of plant, equipment and intangible software assets(487)(774) (4,272)(6,603)Purchase of short term investments(6)(8,245) (5,885)(243,913)Sale of short term investments96210,502 6,237172,864 4691,483 (3,920)(77,652)      Financing activities     Repayment of government grants(103)- (2,427)(2,477)Proceeds from the issuance of share capital86183 344833Payment to cancel warrant-- (80)- (17)183 (2,163)(1,644)      Effect of foreign exchange on cash and cash equivalents27(130) (72)(49)      Net increase (decrease) in cash during period2,3911,156 1,005(84,997)      Cash and cash equivalents - Beginning of period1,5661,796 2,95287,949      Cash and cash equivalents - End of period3,9572,952 3,9572,952   SOURCE: Sandvine IncorporatedFor further information: INVESTOR RELATIONS CONTACT Rick Wadsworth Sandvine +1 519 880 2400 ext. 3503 MEDIA CONTACT Sacha DeGroot Sandvine +1 519 880 2400 x 2232 AIM NOMAD Andrew Chubb/Simon Bridges Canaccord Genuity Limited +44 0207 523 8000