Bridgewater Systems Reports Financial Results for Q1 2010
- Revenue of $24.5 million for Q1 2010, an increase of 74% over prior year - Net earnings of $4.6 million, or $0.19 per share fully diluted, compared with net earnings of $2.9 million, or $0.12 per share fully diluted, in Q1 2009 - Cash and cash equivalents, and short-term investments increased to $84.3 million - Updates guidance for 2010
OTTAWA, April 29 /CNW/ - Bridgewater Systems (TSX: BWC), the mobile personalization company, today announced financial results for the three months ended March 31, 2010. This news release contains forward-looking statements. Reference should be made to "Forward-Looking Statements" at the end of this news release. All amounts are stated in Canadian dollars except where otherwise noted.
"Current customer engagements drove significant increases in revenues and earnings in the first quarter," said Ed Ogonek, CEO of Bridgewater Systems. "Mobile service providers globally are increasingly challenged by the surge in data traffic, which is generating growing interest in our intelligent control solutions, reflected in a robust new business pipeline. We are focused on converting this interest into new customer wins during 2010, particularly outside North America, while expanding our business with current customers as they manage quickly growing mobile data traffic across 3G and 4G networks."
Financial Highlights -------------------- - Revenue of $24.5 million for Q1 2010 represents an increase of 74% compared with $14.0 million for Q1 2009. Product revenue for Q1 2010 was $18.9 million, an increase of 76%, compared with $10.7 million for Q1 2009. Service and support revenue was $5.6 million for Q1 2010 compared to $3.3 million for Q1 2009, an increase of 71%. - The increase in product revenue primarily reflects the delivery and acceptance of the WideSpan systems for Verizon Wireless and the advancement of revenue due to an expected transition in the Company's business with Verizon Wireless. Going forward, the Company expects continued license of its software and solutions by Verizon Wireless in a software-based transaction license model as Verizon Wireless transitions its requirements to provide for greater hardware platform flexibility and to support increased transaction capacity. - Q1 2010 gross margin was $16.3 million (67% of revenue) versus $10.7 million (76% of revenue) in Q1 2009, reflecting increases in direct product costs associated with the delivery of integrated systems, investments in operations support infrastructure, as well as increased global professional services engagements. - Total operating expenses in Q1 2010 were $9.9 million (40% of revenue), net of $0.4 million of investment tax credits, compared with $8.2 million (58% of revenue) in the same period last year. - Net earnings before income taxes rose to $5.7 million in Q1 2010, versus $2.8 million in Q1 2009. - Net earnings for Q1 2010 increased to $4.6 million, or $0.19 per share fully diluted, versus $2.9 million, or $0.12 per share fully diluted, in the prior year. - Cash and cash equivalents, and short-term investments grew to $84.3 million, compared with $67.3 million at December 31, 2009. Business Highlights ------------------- - Selected by Mobily, the largest provider of mobile broadband in Saudi Arabia, to provide the Bridgewater(R) Service Controller and Policy Controller to manage mobile data growth across its WiMAX, and Wi-Fi networks with plans to integrate with the HSPA network. - Bridgewater(R) Policy Controller was deployed by a European property of a major global mobile operator group to meet new EU mobile data roaming legislation and empower subscribers to personalize and manage mobile data usage. - Extended No.1 global policy market leadership in both the overall global policy market and in the mobile policy segment according to Infonetics Research. - Continued momentum in helping customers transform to 4G with five confirmed LTE trials with major operators in Asia Pacific and North and South America for the Bridgewater(R) EPC 500 'control-plane-in-a- box' system. Bridgewater also showcased industry leading LTE control plane interoperability at the Global MultiService Forum testing event. - Unveiled new solutions to optimize 3G networks and alleviate congestion including Bridgewater's RAN congestion solution and mobile data offload solutions. Outlook ------- With the release of its Q1 2010 results, Bridgewater updated guidance for 2010. For 2010, the Company is expecting: - Revenues of $85 to $94 million - Net earnings before tax of $14 to $17 million - Net earnings after tax of $10 to $12 million
Factors supporting Bridgewater's annual outlook include: high revenue visibility due to significant contracts with Tier 1 customers; a large installed customer base in existing and emerging markets; the long-term industry trends of growth in mobile data services and applications; and continued evolution of our business model for delivering products and services to address higher transaction capacity needs.
The complete financial statements and management's discussion and analysis for the three months ended March 31, 2010 can be found at www.bridgewatersystems.com or at www.sedar.com.
Forward-Looking Statements
Certain statements in this release, including the estimates of future revenues and net earnings provided above, constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws. These statements are subject to certain assumptions, risks and uncertainties. Material factors and assumptions used to develop such estimates include:
- Bridgewater's ability to maintain its relationships and contracts with Tier 1 customers; - Bridgewater's visibility into the deployment plans of its major customers; - Bridgewater's ability to maintain and grow its installed customer base in existing and emerging markets; and - Bridgewater's expectations regarding long-term industry trends in growth in mobile data services and applications.
Readers are cautioned not to place undue reliance on such statements. These statements are provided to enable external stakeholders to understand Bridgewater's expectations as of the date of this release and may not be appropriate for other purposes.
Actual results, performance, achievements or developments of Bridgewater may differ materially from the results, performance, achievements or developments expressed or implied by such statements. Risk factors that may cause the actual results, performance, achievements or developments of Bridgewater to differ materially from the results, performance, achievements or developments expressed or implied by such statements can be found in the public documents filed by Bridgewater with Canadian securities regulatory authorities, including, but not limited to Bridgewater's Annual Information Form dated March 31, 2009 and Management's Discussion & Analysis of Financial Condition and Results of Operation dated March 31, 2010, which are available at www.sedar.com, and include the following:
- Bridgewater operates in highly competitive and continually evolving markets, and if it is not able to compete effectively, it may not be able to continue to expand its business as expected; - Bridgewater relies on a limited number of customers for a large percentage of its revenue, and the loss of, or significant shortfall in business from, a key customer could significantly reduce its revenue; - Bridgewater must continue to evolve its business models and platforms for delivery of products and services to respond to transaction capacity needs of its customers; - Bridgewater's engagements with its customers involve complex arrangements and the size, timing and contractual terms of orders for Bridgewater's products may affect when revenue is recognized; - Bridgewater has a lengthy and variable sales cycle; and - Bridgewater may engage in future acquisitions that could disrupt its business and affect its financial condition and operating results.
Bridgewater assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by law.
Conference Call and Webcast
A conference call and webcast will be held today, Thursday, April 29, 2010 at 8:30 a.m. ET to discuss this announcement. The telephone numbers to access the call are 647-427-7450 or 1-888-231-8191. To access the live webcast, please visit www.bridgewatersystems.com or www.newswire.ca. Participants will require Windows Media Player(TM) to listen to the webcast.
About Bridgewater Systems
Bridgewater Systems, the mobile personalization company, enables service providers to efficiently manage and profit from mobile data services, content and commerce. The company's market leading mobile personalization suite provides a real-time, unified view of subscribers including entitlements, devices, networks, billing profiles, preferences and context. Anchored by Bridgewater's Subscriber Data Broker(TM), the portfolio of carrier-grade and standards-based products includes the Bridgewater(R) Service Controller (AAA), the Bridgewater(R) Policy Controller (PCRF) and the Bridgewater(R) Home Subscriber Server (HSS). More than 150 leading service providers including America Movil, Bell Canada, Clearwire, Cox, Hutchison Telecom, Iusacell, Scartel, SmarTone-Vodafone, Sprint, Tata Teleservices, Tatung, Telmex, Telstra, and Verizon Wireless use Bridgewater's solutions to rapidly deliver innovative mobile services to over 150 million subscribers. For more information, visit us at www.bridgewatersystems.com.
Bridgewater, Bridgewater Systems, the Bridgewater Systems logo, WideSpan, Smart Caps, myPolicy, and Subscriber Data Broker are trademarks or registered trademarks of Bridgewater Systems Corporation. All other company, product names and any registered and unregistered trademarks mentioned are used for identification purposes only and remain the exclusive property of their respective owners.
BRIDGEWATER SYSTEMS CORPORATION Consolidated Statements of Earnings and Comprehensive Earnings For the three months ended March 31, 2010 and 2009 (expressed in Canadian dollars) (unaudited) ------------------------------------------------------------------------- Three months ended ------------------------------ March 31, March 31, 2010 2009 --------------- -------------- Revenue Product $ 18,851,979 $ 10,737,290 Service and support 5,643,892 3,305,807 ------------------------------------------------------------------------- 24,495,871 14,043,097 Cost of sales 8,180,039 3,323,068 ------------------------------------------------------------------------- Gross margin 16,315,832 10,720,029 ------------------------------------------------------------------------- Expenses Sales and marketing 4,040,311 2,932,558 Research and development 5,184,082 3,427,970 General and administration 1,025,678 1,501,276 Investment tax credit carryforwards recognized (400,000) - Bad debt (recovery) expense (49,929) 223,838 Stock-based compensation 115,862 75,488 ------------------------------------------------------------------------- 9,916,004 8,161,130 ------------------------------------------------------------------------- Earnings before undernoted items 6,399,828 2,558,899 Foreign exchange loss (740,319) (3,697) Interest and other income 72,160 230,023 Loss on disposal of property, equipment and intangible assets (22,000) - ------------------------------------------------------------------------- Earnings before income taxes 5,709,669 2,785,225 Current income tax expense 400,000 - Future income tax expense (recovery) 717,000 (100,000) ------------------------------------------------------------------------- NET EARNINGS AND COMPREHENSIVE EARNINGS $ 4,592,669 $ 2,885,225 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net earnings per share - basic $ 0.19 $ 0.12 Net earnings per share - diluted $ 0.18 $ 0.12 Weighted average number of shares outstanding - basic 24,441,881 23,107,823 Weighted average number of shares outstanding - diluted 25,558,286 24,401,989 BRIDGEWATER SYSTEMS CORPORATION Consolidated Balance Sheets as at March 31, 2010 and December 31, 2009 (expressed in Canadian dollars) (unaudited) ------------------------------------------------------------------------- March 31, December 31, 2010 2009 --------------- -------------- CURRENT ASSETS Cash and cash equivalents $ 76,018,916 $ 53,828,859 Short-term investments 8,232,449 13,459,190 Accounts receivable 9,831,353 24,879,197 Unbilled receivables 553,324 1,360,741 Deferred cost of sales 9,093,064 12,324,813 Prepaid expenses and other assets 3,923,485 3,229,227 Future income tax asset 3,662,000 5,113,000 ------------------------------------------------------------------------- 111,314,591 114,195,027 FUTURE INCOME TAX ASSET 4,437,000 3,703,000 PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS 3,337,404 3,604,811 ------------------------------------------------------------------------- $ 119,088,995 $ 121,502,838 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CURRENT LIABILITIES Accounts payable and accrued liabilities $ 5,557,413 $ 9,617,441 Deferred revenue 41,199,010 44,288,403 ------------------------------------------------------------------------- 46,756,423 53,905,844 ------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Share capital 69,903,009 69,872,842 Contributed surplus 1,020,936 908,194 Retained Earnings (Deficit) 1,408,627 (3,184,042) ------------------------------------------------------------------------- 72,332,572 67,596,994 ------------------------------------------------------------------------- $ 119,088,995 $ 121,502,838 ------------------------------------------------------------------------- ------------------------------------------------------------------------- BRIDGEWATER SYSTEMS CORPORATION Consolidated Statements of Cash Flows For the three months ended March 31, 2010 and 2009 (expressed in Canadian dollars) (unaudited) ------------------------------------------------------------------------- Three months ended ------------------------------ March 31, March 31, 2010 2009 --------------- -------------- NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES: OPERATING Net earnings $ 4,592,669 $ 2,885,225 Items not affecting cash Bad debt expense - 223,838 Stock-based compensation 115,862 75,488 Foreign exchange loss (gain) on cash held in foreign currency 1,641,768 (437,144) Loss on disposal of assets 22,000 - Future income tax expense (recovery) 717,000 (100,000) Amortization of property, equipment and intangible assets 318,572 281,896 ------------------------------------------------------------------------- 7,407,871 2,929,303 Changes in non-cash operating working capital items 11,328,422 (1,687,765) ------------------------------------------------------------------------- 18,736,293 1,241,538 ------------------------------------------------------------------------- INVESTING Receipt of short-term investments 5,226,741 - Purchases of property, equipment and intangible assets (158,256) (373,867) Deferred cost of sales - 741,348 ------------------------------------------------------------------------- 5,068,485 367,481 ------------------------------------------------------------------------- FINANCING Proceeds from issuance of common shares 27,047 1,736,412 Repurchase of shares under normal course issuer bid - (208,291) ------------------------------------------------------------------------- 27,047 1,528,121 ------------------------------------------------------------------------- Foreign exchange (loss) gain on cash held in foreign currency (1,641,768) 437,144 ------------------------------------------------------------------------- NET CASH INFLOW 22,190,057 3,574,284 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 53,828,859 50,363,771 ------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 76,018,916 $ 53,938,055 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplementary information: Cash on hand and bank balances $ 36,819,311 $ 9,375,368 Cash equivalents 39,199,605 44,562,687 ------------------------------------------------------------------------- Total cash and cash equivalents $ 76,018,916 $ 53,938,055 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Interest received $ 52,095 $ 226,630 BRIDGEWATER SYSTEMS CORPORATION Consolidated Statements of Shareholders' Equity For the three months ended March 31, 2010 (expressed in Canadian dollars) (unaudited) ------------------------------------------------------------------------- Common Shares Contributed Number Amount Surplus ------ ------ ------- ------------------------------------------------------------------------- Balance at December 31, 2009 24,432,468 $ 69,872,842 $ 908,194 ------------------------------------------------------------------------- Stock-based compensation - - 115,862 Repurchase of shares under normal course issuer bid - - - Exercise of stock options 15,304 30,167 (3,120) Net earnings - - - ------------------------------------------------------------------------- Balance at March 31, 2010 24,447,772 $ 69,903,009 $ 1,020,936 ------------------------------------------------------------------------- ------------------------------------------------------------------------- ---------------------------------------------------------- Retained Earnings Shareholders' (Deficit) Equity --------- ------ ---------------------------------------------------------- Balance at December 31, 2009 $ (3,184,042) $ 67,596,994 ---------------------------------------------------------- Stock-based compensation - 115,862 Repurchase of shares under normal course issuer bid - - Exercise of stock options - 27,047 Net earnings 4,592,669 4,592,669 ---------------------------------------------------------- Balance at March 31, 2010 $ 1,408,627 $ 72,332,572 ---------------------------------------------------------- ----------------------------------------------------------
For further information: Investor Relations, Kim Butler, Chief Financial Officer, Bridgewater Systems, [email protected], (613) 591-9104 extension 6023; Craig Armitage, The Equicom Group Inc., [email protected], (416) 815-0700 extension 278; Media Relations, Joanne Steinberg, Marketing Director, Bridgewater Systems, [email protected], (613) 591-9104 extension 2032
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