Sandvine reports Q1 2013 results

WATERLOO, ON, April 11, 2013 /CNW/ - Sandvine, (TSX:SVC) a leading provider of intelligent network policy control solutions for fixed and mobile operators, today reported $25.0 million in revenue for its first quarter of 2013, non-IFRS income of $2.2 million and net income of $1.7 million. The results represent record first quarter revenue. All results are reported in U.S. dollars under International Financial Reporting Standards (IFRS), unless otherwise specified.

Q1 2013 highlights:

• Revenue by access technology market: DSL 51%; wireless 32%; cable 16%
• Revenue by geography: APAC 39%; EMEA 32%; NA 23%; CALA 6%
• Revenue by sales channel: reseller 78%; direct 22%
• Gross margin: 72%
• Cash, cash equivalents and short-term investments balance: $82.9 million
• Announced $6.5 million in follow-on Network Policy Control orders from a Top-5 Asian communications service provider
• Won seven new service provider customers.

"The first quarter demonstrated continued progress. Revenue was up 25% from the first quarter of 2012, we were profitable, and we grew our cash balance," said Dave Caputo, Sandvine's President and CEO. "Success in securing large expansion orders from major existing customers and improved results from the EMEA sales region were key business drivers in the first quarter. Both of these factors will remain important to continued success through the remainder of 2013."

FINANCIAL HIGHLIGHTS (All amounts are in U.S. dollars)

Millions of dollars, except per share data and where otherwise indicated	Q1 2013		Q4 2012		Change		Q1 2012		Change
Revenue	25.0		27.5		-9%		20.1		25%
Gross Margin percent	72%		71%		1pp		54%		18pp
Expenses	16.1		12.9		24%		17.2		-7%
Net Income (Loss)	1.7		6.5				(6.5)
Diluted Income (Loss) Per Share	0.012		0.046				(0.047)
Non-IFRS Income (Loss)^1	2.2		6.9				(5.8)
Non-IFRS Diluted Income (Loss) Per Share^1	0.016		0.049				(0.042)

¹ See Table 1 below regarding non-IFRS financial measures

Sandvine also announces that it has entered in to a new automatic share purchase plan with a broker for the following quarter to facilitate repurchases of shares under its previously announced normal course issuer bid.

CONFERENCE CALL

The Company will discuss the financial results and business outlook on a conference call at 8:30 a.m. Eastern time today.

Toll-free North America				[phone]
Webcast				www.sandvine.com/investors

A replay of the call will be available at [phone] (passcode 34562431#) from approximately 11:00 a.m. Eastern time today through April 21.

ABOUT SANDVINE
Sandvine'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, www.sandvine.com.

CAUTION REGARDING FORWARD LOOKING INFORMATION
Certain 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.  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 1

1. Non-IFRS Financial Measures

The 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 ended
			February 28 2013 $	November 30 2012 $	February 29 2012 $
			Amounts in US$ thousands
Net income (loss)			1,698	6,466	(6,487)
	Adjustment for
		Stock based compensation expense	519	433	534
		Amortization of intangible assets acquired through business acquisitions	-	-	185
Non-IFRS Net income (loss)			2,217	6,899	(5,768)
			Three month period ended
			February 28 2013 $	November 30 2012 $	February 29 2012 $
Diluted earnings (loss) per share			0.012	0.046	(0.047)
Impact on diluted earnings (loss) per share of Non-IFRS measures			0.004	0.003	0.005
Non-IFRS Diluted earnings (loss) per share			0.016	0.049	(0.042)

 

Sandvine Corporation Consolidated Statements of Financial Position (in thousands of United States dollars, except share and per share data) (unaudited)
	As at
	February 28 2013 $	November 30 2012 $
Assets
Current assets
Cash and cash equivalents	8,667	3,957
Short term investments	74,220	70,679
Accounts receivable	25,472	32,169
Inventory	6,091	6,378
Other current assets	3,183	2,868
	117,633	116,051
Non current assets
Plant and equipment	10,152	10,654
Intangible assets	4,353	4,443
Grant receivable	4,653	4,343
Deferred tax asset	212	212
Other assets	511	511
	19,881	20,163
	137,514	136,214
Liabilities
Current liabilities
Trade and other payables	10,007	10,453
Current portion of deferred revenue	12,419	9,350
	22,426	19,803
Non current liabilities
Deferred revenue	833	503
Other non current liabilities	1,332	3,808
	2,165	4,311
	24,591	24,114
Shareholders' equity
Share capital	120,223	120,626
Contributed surplus	14,964	14,652
Accumulated comprehensive income (loss)	(477)	113
Retained deficit	(21,787)	(23,291)
	112,923	112,100
	137,514	136,214

 

Sandvine Corporation Consolidated Statements of Income (in thousands of United States dollars, except share and per share data) (unaudited)
	For the three month period ended
	February 28 2013 $	February 29 2012 $
Revenue
Product	18,049	13,030
Service	6,980	7,068
	25,029	20,098
Cost of sales
Product	4,524	7,208
Service	2,523	2,095
	7,047	9,303
Gross margin	17,982	10,795
Expenses
Sales and marketing	7,163	6,298
Research and development	6,065	7,306
General and administrative	2,778	3,025
Other losses, net	44	537
	16,050	17,166
Income (loss) from operations	1,932	(6,371)
Finance income (costs), net
Finance income	39	44
Finance costs	(111)	(132)
Foreign exchange losses	(63)	(126)
Other finance gains, net	-	146
Finance income (costs), net	(135)	(68)
Income (loss) before provision for income taxes	1,797	(6,439)
Provision for income taxes
Current	99	48
Net income (loss) for the period	1,698	(6,487)
Earnings (loss) per share
Basic earnings (loss) per share	0.012	(0.047)
Diluted earnings (loss) per share	0.012	(0.047)

 

Sandvine Corporation Consolidated Statements of Cash Flows (in thousands of United States dollars, except share and per share data) (unaudited)
		For the three month period ended
		February 28 2013 $	February 29 2012 $
Cash provided by (used in)
Operating activities
Net income (loss) for the period		1,698	(6,487)
Items not affecting cash
	Amortization of intangible assets	277	538
	Depreciation of plant and equipment	1,071	1,096
	Unrealized foreign exchange gains	(96)	(237)
	Finance costs	111	132
	Other finance losses	-	(146)
	Stock-based compensation	519	534
	Other	61	583
		3,641	(3,987)
Changes in non-cash working capital balances		7,848	7,928
		11,489	3,941
Investing activities
Purchase of plant, equipment and intangible software assets		(850)	(1,728)
Purchase of short term investments		(3,540)	(3,046)
Sale of short term investments		-	5,000
		(4,390)	226
Financing activities
Repayment of government grants		(2,204)	(2,202)
Proceeds from the issuance of share capital		194	80
Payment to cancel warrant		-	(80)
Common share repurchase		(365)	-
		(2,375)	(2,202)
Effect of foreign exchange on cash and cash equivalents		(14)	129
Net increase in cash during period		4,710	2,094
Cash and cash equivalents - Beginning of period		3,957	2,952
Cash and cash equivalents - End of period		8,667	5,046
Cash and cash equivalents are represented by
Balances with banks		8,667	5,018
Cash equivalents		-	28

 

 

 

 

SOURCE: Sandvine Incorporated

INVESTOR CONTACT
Rick Wadsworth
Sandvine
[phone] ext. 3503
[email protected] 

MEDIA RELATIONS CONTACT
Jennifer Ross
Sandvine
[phone] ext. 3605
[email protected]