Bridgewater Systems Reports Financial Results for Q2 2010
- Revenue of $22.7 million for Q2 2010, an increase of 41% over prior year - Earnings before income taxes of $4.8 million for Q2 2010, compared with $4.1 million in Q2 2009 - Cash and cash equivalents, and short-term investments of $77.6 million
OTTAWA, July 29 /CNW/ - Bridgewater Systems (TSX: BWC), the mobile personalization company, today announced financial results for the three and six months ended June 30, 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.
"Our investments to expand global sales, service and partnerships are aimed at securing new customers and capitalizing on the growing demand for our solutions to manage rapid mobile data growth, said Ed Ogonek, CEO of Bridgewater Systems. "We are particularly pleased with our progress with Tier 1 partners."
Financial Highlights -------------------- - Revenue of $22.7 million for Q2 2010 represents an increase of 41% compared with $16.1 million for Q2 2009. Product revenue for Q2 2010 was $17.1 million, an increase of 47%, compared with $11.7 million for Q2 2009. - On a year-to-date basis, revenues of $47.2 million are 56% higher than revenues in the first six months of fiscal 2009. - Q2 2010 gross margin was $15.0 million (66% of revenue) versus $12.1 million (75% of revenue) in Q2 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 Q2 2010 were $10.7 million (47% of revenue), net of $0.6 million of investment tax credits, compared with $8.2 million (51% of revenue) in the same period last year. The year-over-year increase in operating expenses mainly reflects higher investments in research and development and sales and marketing to support the Company's growth initiatives. - Net earnings before income taxes rose 17% to $4.8 million in Q2 2010, versus $4.1 million in Q2 2009. Net earnings before income taxes for the first half of 2010 increased to $10.5 million, compared with $6.9 million for the same period in 2009. - Net earnings for Q2 2010 were $3.2 million, or $0.13 per share fully diluted, versus $4.1 million, or $0.17 per share fully diluted, in the prior year. Net earnings for Q2 2010 include a current income tax expense of $0.6 million and non-cash future income tax expense of $0.9 million. - Cash and cash equivalents, and short-term investments were $77.6 million, compared with $67.3 million at December 31, 2009. Business Highlights ------------------- - Opened a new India Center of Excellence that is providing technology development sales, professional services and support services. - Broadened relationship with Cisco by becoming a Cisco Preferred Solution Developer for the mobile packet core for 3G and 4G networks. Successfully completed extensive interoperability testing with Cisco and, subsequent to quarter end, announced the availability of the Bridgewater(R) Policy Controller and Home Subscriber Server on the Cisco Unified Computing System. This enables service providers to deploy Bridgewater's complete and pre-integrated control plane portfolio to increase scalability and business agility, and to reduce total cost of ownership. - Added 17 new customers in the quarter, including 11 in the APAC and EMEA regions. Outlook ------- With the release of its Q2 2010 results, Bridgewater reiterated 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 and six months ended June 30, 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, 2010 and Management's Discussion & Analysis of Financial Condition and Results of Operation dated June 30, 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, July 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 and six months ended June 30, 2010 and 2009 (expressed in Canadian dollars) (unaudited) ------------------------------------------------------------------------- Three months ended Six months ended --------------------------- --------------------------- June 30, June 30, June 30, June 30, 2010 2009 2010 2009 ------------- ------------- ------------- ------------- Revenue Product $ 17,144,414 $ 11,679,272 $ 35,996,393 $ 22,416,562 Service and support 5,584,958 4,455,216 11,228,850 7,761,023 --------------------------------------------- --------------------------- 22,729,372 16,134,488 47,225,243 30,177,585 Cost of sales 7,732,280 4,083,645 15,912,319 7,406,713 --------------------------------------------- --------------------------- Gross margin 14,997,092 12,050,843 31,312,924 22,770,872 --------------------------------------------- --------------------------- Expenses Sales and marketing 3,840,382 3,281,831 7,880,693 6,214,389 Research and development 6,053,970 3,753,494 11,238,052 7,181,464 General and administration 1,178,187 1,602,411 2,203,865 3,103,687 Investment tax credit carryforwards recognized (600,000) - (1,000,000) - Bad debt recovery (Note 3) - (487,735) (49,929) (263,897) Stock-based compensation 227,325 95,000 343,187 170,488 --------------------------------------------- --------------------------- 10,699,864 8,245,001 20,615,868 16,406,131 --------------------------------------------- --------------------------- Earnings before undernoted items 4,297,228 3,805,842 10,697,056 6,364,741 Foreign exchange gain (loss) 434,150 98,305 (306,169) 94,608 Interest and other income 85,281 168,871 157,441 398,894 Loss on disposal of property, equipment and intangible assets (64,724) - (86,724) - --------------------------------------------- --------------------------- Earnings before income taxes 4,751,935 4,073,018 10,461,604 6,858,243 Current income tax expense 600,000 - 1,000,000 - Future income tax expense (recovery) 944,000 (70,000) 1,661,000 (170,000) --------------------------------------------- --------------------------- NET EARNINGS AND COMPREHENSIVE EARNINGS $ 3,207,935 $ 4,143,018 $ 7,800,604 $ 7,028,243 --------------------------------------------- --------------------------- --------------------------------------------- --------------------------- Net earnings per share - basic $ 0.13 $ 0.17 $ 0.32 $ 0.30 Net earnings per share - diluted $ 0.13 $ 0.17 $ 0.30 $ 0.29 Weighted average number of shares outstanding - basic (Note 2) 24,619,914 24,483,296 24,531,389 23,653,629 Weighted average number of shares outstanding - diluted (Note 2) 25,591,709 25,033,020 25,580,342 24,615,850 BRIDGEWATER SYSTEMS CORPORATION Consolidated Balance Sheets as at June 30, 2010 and December 31, 2009 (expressed in Canadian dollars) (unaudited) ------------------------------------------------------------------------- June 30, December 31, 2010 2009 -------------- -------------- CURRENT ASSETS Cash and cash equivalents $ 64,035,839 $ 53,828,859 Short-term investments (Note 3) 13,612,070 13,459,190 Accounts receivable 11,345,383 24,879,197 Unbilled receivables 787,212 1,360,741 Deferred cost of sales 6,085,031 12,324,813 Prepaid expenses and other assets 4,302,699 3,229,227 Future income tax asset 2,021,000 5,113,000 ------------------------------------------------------------------------- 102,189,234 114,195,027 FUTURE INCOME TAX ASSET 5,134,000 3,703,000 PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS 3,019,155 3,604,811 ------------------------------------------------------------------------- $ 110,342,389 $ 121,502,838 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CURRENT LIABILITIES Accounts payable and accrued liabilities $ 5,475,413 $ 9,617,441 Deferred revenue 28,428,293 44,288,403 ------------------------------------------------------------------------- 33,903,706 53,905,844 ------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Share capital (Note 2) 70,667,939 69,872,842 Contributed surplus 1,154,182 908,194 Retained earnings (Deficit) 4,616,562 (3,184,042) ------------------------------------------------------------------------- 76,438,683 67,596,994 ------------------------------------------------------------------------- $ 110,342,389 $ 121,502,838 ------------------------------------------------------------------------- ------------------------------------------------------------------------- BRIDGEWATER SYSTEMS CORPORATION Consolidated Statements of Cash Flows For the three and six months ended June 30, 2010 and 2009 (expressed in Canadian dollars) (unaudited) ------------------------------------------------------------------------- Three months ended Six months ended --------------------------- --------------------------- June 30, June 30, June 30, June 30, 2010 2009 2010 2009 ------------- ------------- ------------- ------------- NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES: OPERATING Net earnings $ 3,207,935 $ 4,143,018 $ 7,800,604 $ 7,028,243 Items not affecting cash Bad debt expense - 23,860 - 247,698 Stock-based compensation 227,325 95,000 343,187 170,488 Foreign exchange loss (gain) on cash held in foreign currency (1,227,211) 2,088,394 414,557 1,651,250 Loss on disposal of assets 64,724 - 86,724 - Future income tax expense (recovery) 944,000 (70,000) 1,661,000 (170,000) Amortization of property, equipment and intangible assets 328,559 311,225 647,132 593,121 ------------------------------------------------------------------------- 3,545,332 6,591,497 10,953,204 9,520,800 Changes in non-cash operating working capital items (Note 5) (11,956,863) 891,553 (628,441) (54,864) ------------------------------------------------------------------------- (8,411,531) 7,483,050 10,324,763 9,465,936 ------------------------------------------------------------------------- INVESTING Purchase of short-term investments (5,379,621) - (152,880) - Purchases of property, equipment and intangible assets (89,987) (585,272) (248,244) (959,139) ------------------------------------------------------------------------- (5,469,608) (585,272) (401,124) (959,139) ------------------------------------------------------------------------- FINANCING Proceeds from issuance of common shares (Note 2) 670,851 434,391 697,898 2,170,803 Repurchase of shares under normal course issuer bid (Note 2) - (1,580,051) - (1,788,342) ------------------------------------------------------------------------- 670,851 (1,145,660) 697,898 382,461 ------------------------------------------------------------------------- Foreign exchange gain (loss) on cash held in foreign currency 1,227,211 (2,088,394) (414,557) (1,651,250) ------------------------------------------------------------------------- NET CASH INFLOW (OUTFLOW) (11,983,077) 3,663,724 10,206,980 7,238,008 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 76,018,916 53,938,055 53,828,859 50,363,771 ------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 64,035,839 $ 57,601,779 $ 64,035,839 $ 57,601,779 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Supplementary information: Cash on hand and bank balances $ 24,836,234 $ 4,900,007 $ 24,836,234 $ 4,900,007 Cash equivalents 39,199,605 52,701,772 39,199,605 52,701,772 ------------------------------------------------------------------------- Total cash and cash equivalents $ 64,035,839 $ 57,601,779 $ 64,035,839 $ 57,601,779 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Interest received $ 70,571 $ 168,871 $ 122,667 $ 395,501 BRIDGEWATER SYSTEMS CORPORATION Consolidated Statements of Shareholders' Equity For the six months ended June 30, 2010 (expressed in Canadian dollars) (unaudited) ------------------------------------------------------------------------- Common Shares Contributed Number Amount Surplus ------ ------ ------- Three months ended June 30, 2010 ------------------ Balance at March 31, 2010 24,447,772 $ 69,903,009 $ 1,020,936 ------------------------------------------------------------------------- Stock-based compensation - - 227,325 Exercise of stock options (Note 2) 320,406 764,930 (94,079) Net earnings - - - ------------------------------------------------------------------------- Balance at June 30, 2010 24,768,178 $ 70,667,939 $ 1,154,182 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Six months ended June 30, 2010 ---------------- Balance at December 31, 2009 24,432,468 $ 69,872,842 $ 908,194 ------------------------------------------------------------------------- Stock-based compensation - - 343,187 Exercise of stock options (Note 2) 335,710 795,097 (97,199) Net earnings - - - ------------------------------------------------------------------------- Balance at June 30, 2010 24,768,178 $ 70,667,939 $ 1,154,182 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Retained Earnings Shareholders' (Deficit) Equity --------- ------ Three months ended June 30, 2010 ------------------ Balance at March 31, 2010 $ 1,408,627 $ 72,332,572 ----------------------------------------------------------- Stock-based compensation - 227,325 Exercise of stock options (Note 2) - 670,851 Net earnings 3,207,935 3,207,935 ----------------------------------------------------------- Balance at June 30, 2010 $ 4,616,562 $ 76,438,683 ----------------------------------------------------------- ----------------------------------------------------------- Six months ended June 30, 2010 ---------------- Balance at December 31, 2009 $ (3,184,042) $ 67,596,994 ----------------------------------------------------------- Stock-based compensation - 343,187 Exercise of stock options (Note 2) - 697,898 Net earnings 7,800,604 7,800,604 ----------------------------------------------------------- Balance at June 30, 2010 $ 4,616,562 $ 76,438,683 ----------------------------------------------------------- -----------------------------------------------------------
For further information: Investor Relations, Kim Butler, Chief Financial Officer, Bridgewater Systems, [email protected], +1 613-591-9104 extension 6023; Craig Armitage, The Equicom Group Inc., [email protected], +1 416-815-0700 extension 278; Media Relations, Joanne Steinberg, Marketing Director, Bridgewater Systems, [email protected], +1 613-591-9104 extension 2032
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