Entrust Announces Financial Results for First-Quarter 2009



    


    - Total revenues of $22.6 million, a decrease of 12% over Q1 2008

    - Product revenues of $9.4 million, a decrease of 2% over Q1 2008

    - Deferred revenue increased to $29.5 million, a 2% increase from Q1 2008

    
    - Entrust recorded a net income for the quarter, calculated in accordance
with GAAP, of $1.8 million, or $0.03 per share
    

    
    - Cash and Cash Equivalents increased to $26.6 million, an increase of
$3.8 million over Q1 2008
    


    
    DALLAS, April 28 /PRNewswire-FirstCall/ -- Entrust, Inc. (Nasdaq:   ENTU),
a world leader in securing digital identities and information, today announced
financial results for its fiscal quarter ended March 31, 2009.
    

    
    Revenues for the first quarter were $22.6 million, a decrease of 12
percent from $25.8 million in Q1 2008.  Revenues were impacted by a strong
U.S. dollar in Q1 2009. As a result, adjusted for currency, total revenues
were $25.3 million, a decrease of 2 percent from Q1 2008. Product revenue
decreased to $9.4 million in the quarter, a decrease of 2 percent from $9.6
million in Q1 2008. Product revenues adjusted for currency were $10.6 million,
an increase of 10 percent over Q1 2008. The revenue figures, as adjusted for
currency, are calculated based upon the actual currency rates in the
comparable period.
    

    
    Deferred revenue increased 2 percent in the quarter to approximately
$29.5 million versus Q1 2008. Deferred revenues adjusted for currency were
$33.4 million, an increase of 16 percent from Q1 2008 and an increase of 7
percent from Q4 2008. Services accounted for approximately 58 percent ($13.2
million) of total revenue in the quarter, a decrease of 18 percent from $16.2
million in Q1 2008. Declines in professional services revenues and the impact
on our Support and Maintenance stream by a strong U.S. dollar accounted for
the decrease in overall service and maintenance in the quarter. Services
revenues, adjusted for currency, were $14.7 million, a decrease of 9 percent
from Q1 2008.
    

    
    "We are pleased with our financial performance for the quarter," said
Bill Conner, Entrust president and chief executive officer. "Despite a tough
economic environment we were able to increase our non-GAAP earnings-per-share
by three cents and generate positive cash flow from operations of more than
$4.4 million (net of change in accrued restructuring charges), which helped us
increase our cash balance to $26.6 million."
    

    
    Entrust recorded a Q1 2009 net income, calculated in accordance with
GAAP, of $1.8 million, or $0.03 per share, compared to Q1 2008 net loss of
$1.2 million, or $0.02 per share. On a non-GAAP basis, the company recorded a
Q1 2009 non-GAAP income of $2.4 million, or $0.04 per share, compared to Q1
2008 non-GAAP income of $344,000 or $0.01 per share. See the financial table
below reconciling these non-GAAP figures to GAAP.
    

    
    Entrust was also cash-flow-from-operations positive by $4.4 million for
Q1 2009, net of change in accrued restructuring charges. Entrust ended the
quarter with cash and cash equivalents of more than $26.6 million and no debt.
    

    
    Because the company has entered into an agreement to be acquired by an
affiliate of Thoma Bravo, LLC, the company is not providing guidance for
future financial results.
    

    Q1 2009 Financial and Operating Highlights:

    --  Revenue of $22.6 million consisted of 42 percent product revenue ($9.4
        million) and 58 percent services and maintenance revenue ($13.2
        million). The top five product transactions accounted for 13 percent
of
        Q1 2009 revenues. There were no product transactions accounting for
        more than $1 million in Q1 2009.  Revenue from transactions less than
        $500,000 decreased 11 percent from Q1, 2008.
    --  Revenue from subscription based product and services accounted for 56
        percent of total revenue for Q1 2009, a decrease of 4 percent on a
        dollar basis, and an increase of 5 percent on a percentage of revenue
        basis from Q1 2008.
    --  Entrust Fraud and Risk Based Authentication products accounted for 25
        percent ($2.3 million) of product revenue for Q1 2009.  Subcategory
        Entrust IdentityGuard and Entrust Transaction Guard Products accounted
        for $1.4 million of product revenue for Q1 2009.
    --  Entrust PKI products accounted for 75 percent ($7.1 million) of
product
        revenue for Q1 2009. Subcategory SSL accounted for $2.8 million of
        product revenue for Q1 2009, an increase of 26 percent year-over-year.
        Subcategory Subscription Product accounted for 37 percent ($3.5
        million) of product revenue for Q1 2009, an increase of 21 percent
        year-over-year.
    --  Product revenue for the quarter was 61 percent Extended Government and
        39 percent Extended Enterprise. The financial services vertical
        accounted for approximately 31 percent of product revenue in Q1 2009.
    --  The average purchase size in the first quarter was $57,000, an
increase
        from $50,000 in Q1 2008. Total transactions in Q1 2009 reached 109,
        which is down from 136 in Q1 2008.  Twenty-nine transactions, or 27
        percent of the total transactions were from new customers.
    --  Deferred revenue of $29.5 million increased 2 percent from Q1 2008.
    --  Cash flow from operations was positive $4.4 million for Q1 2009 before
        the net change in restructuring accruals.

    --  Entrust ended the quarter with $26.6 million in cash and cash
        equivalents and no debt.


    Q1 2009 Technology and Industry Highlights:

    --  Gartner's Magic Quadrant for Web Fraud Detection named Entrust as a
        "leader" based on its "ability to execute" and the company's
        "completeness of vision." According to Gartner, magic quadrant
        "leaders" are vendors who are performing well today, have a clear
        vision of market direction and are actively building competencies to
        sustain their leadership position in the market.
    --  Michigan's Oakland County selected Entrust Extended Validation SSL
        digital certificates to help instill a high level of citizen trust for
        their online eCommerce applications and services. More than 1.2
million
        citizens in Oakland County, which borders Detroit, Mich., will be able
        to access their county eCommerce online services secured with Entrust
        EV SSL certificates.
    --  In SC Magazine's authentication review, Entrust IdentityGuard 9.1
        received a five-star overall rating and was hailed as a "nicely
        integrated platform that provides all the options needed for any small
        to large enterprise deployment." The group review, which compared
        products from 11 vendors, evaluated authentication solutions on the
        merits of features, ease of use, performance, documentation, support
        and value for the money.
    --  Entrust announced the launch of  Entrust Code Signing Certificates,
        which offers customers a wide range of the most popular digital
        certificate types via the company's easy-to-use Certificate Management
        System. The new Entrust Code Signing Certificates are used by
        application and software authors to instill legitimacy into their
        products. This technology -- imbedded into the certificates within the
        software --  is designed to enable end-users to verify the
authenticity
        of an application, which is done by trusting the certification
        authority that issued the certificate.
    --  Entrust introduced Entrust IdentityGuard 9.2, which adds support for
        SMS soft tokens and digital certificates. This authentication solution
        was enhanced with improved administration and reporting, simplified
        enterprise integration and support for new integration partners. The
        release is designed to enable organizations to use digital
certificates
        -- stored locally or on secure devices like smart cards or USB tokens
        -- for strong authentication. This new feature also is designed to
        enable organizations to send a configurable number of OTPs to a mobile
        device for use during authentication.
    --  SC Magazine UK named Entrust's ePassport security solution as a
        finalist for their "Innovation Award." Entrust's ePassport solution
was
        selected by a panel of industry experts from more than 600 entries
        submitted in the "Innovation Award" category.

    --  Entrust's proven risk-based authentication solution was named finalist
        in the "Best Security Solution" category of the Software & Information
        Industry Association's (SIIA) 24th Annual CODiE Awards. Entrust was
        selected as a CODiE finalist from more than 850 nominations submitted
        by some 600 companies. Through a unique combination of journalist and
        expert peer review, the CODiE Awards recognize 71 categories of
        outstanding products and services.


    GAAP to Non-GAAP Reconciliation

    
    The following charges for the first quarter of 2009, reconcile the GAAP
and non-GAAP earnings per share:
    

    --  Stock-based compensation charge in accordance with SFAS 123R of
        approximately $250,000, or $(0.00) per share for the first quarter of
        2009.
    --  Amortization charges of intangible assets primarily associated with
the
        acquisition of Business Signatures and Orion of approximately
$378,000,
        or $(0.01) per share for the first quarter of 2009.

    --  Adjusting for currency to maintain a constant currency when comparing
        first quarter results to prior year.


    
    See table below for further details of Entrust's supplemental
reconciliation of GAAP to non-GAAP measures.
    

    Use of Non-GAAP Financial Measures
    
    To supplement the financial results that are prepared and presented in
accordance with accounting principles generally accepted in the United States,
Entrust's management prepares and uses non-GAAP financial measures for many of
its internal financial, operating and planning reports. The company's
management believes that by excluding charges such as the purchased
intangibles amortization in cost of goods sold, the amortization of purchased
intangible assets in operating expenses, stock compensation expense,
restructuring charges and write down of strategic investments from its
GAAP-based results, these non-GAAP financial measures are more likely to
facilitate investors' understanding of the company's ongoing business
operating results. These non-GAAP financial measures also facilitate
comparisons to the operating results of the company's competitors and provide
investors with greater transparency with respect to the supplemental
information used by management in its operational and financial decision
making.
    

    
    The non-GAAP measures are included to provide investors with supplemental
information to facilitate their understanding of Entrust's operating results
and future prospects. Management uses these non-GAAP measures to assess its
success in reducing the company's cost structure, to measure its ongoing cash
operating costs, and to establish budgets and operational goals. The
presentation of this additional information should not be considered in
isolation or as a substitute for financial and operating results prepared in
accordance with accounting principles generally accepted in the United States,
as non-GAAP measures are susceptible to varying calculations and they may not
be comparable, as presented, to other similarly titled measures of other
companies.
    

    
    This press release contains forward-looking statements relating to the
proposed acquisition of the company by an affiliate of Thoma Brovo, LLC.  Such
statements are based upon preliminary estimates which involve a number of
risks and uncertainties. Among the important factors that could cause actual
results to differ materially from those indicated by such forward-looking
statements are unforeseen operating expenses, inaccuracy in preliminary
estimates issues associated with revenue recognition, issues raised in
connection with the review of quarterly financial results, currency
fluctuations, and the risk factors detailed from time to time in Entrust's
periodic reports and registration statements filed with the Securities and
Exchange Commission, including without limitation Entrust's Annual Report on
Form 10-K for the fiscal year ended December 31, 2008. While Entrust may elect
to update forward-looking statements in the future, Entrust specifically
disclaims any obligation to do so, even if its estimates change.
    

    Important Additional Information Regarding the Proposed Acquisition

    
    In connection with the proposed acquisition of the company by an
affiliate of Thoma Bravo, LLC, on April 27, 2009, Entrust filed a preliminary
proxy statement with the Securities and Exchange Commission (the "SEC"). 
Investors and security holders are advised to read the preliminary proxy
statement and, when it becomes available, the definitive proxy statement, as
well as any other relevant documents filed with the SEC when they become
available, because they will contain important information about the proposed
acquisition and the parties to the acquisition.  Investors and security
holders may obtain a free copy of the proxy statement and other documents
filed by Entrust at the SEC Website at http://www.sec.gov.  The proxy
statement and other documents filed by Entrust with the SEC also may be
obtained for free at Entrust's Internet Website at [www.entrust.com/investors]
or by writing to Entrust, Inc., [One Lincoln Centre, 5400 LBJ Freeway, Suite
1340, Dallas, Texas, USA 75240], Attn: [Investor Relations Department]. In
connection with the special meeting of Entrust stockholders to approve the
merger, Entrust will mail or otherwise provide copies of the definitive proxy
statement to Entrust stockholders who are entitled to attend and vote at the
special meeting.
    

    
    The information in the preliminary proxy statement is not complete and
may be changed.  Before making any voting or investment decisions with respect
to the proposed acquisition or any of the other matters with respect to which
Entrust's stockholders will be asked to vote pursuant to the proxy statement,
Entrust's stockholders are urged to read the definitive proxy statement and
other documents filed by Entrust when they become available.
    

    About Entrust
    
    Entrust [NASDAQ:   ENTU] provides trusted solutions that secure digital
identities and information for enterprises and governments in 2,000
organizations spanning 60 countries. Offering trusted security for less,
Entrust solutions represent the right balance between affordability, expertise
and service. These include SSL, strong authentication, fraud detection,
digital certificates and PKI. For information, call 888-690-2424, e-mail
entrust@entrust.com or visit www.entrust.com.
    

    
    Entrust is a registered trademark of Entrust, Inc. in the United States
and certain other countries.  In Canada, Entrust is a registered trademark of
Entrust Limited.  All Entrust product names are trademarks of Entrust.  All
other company and product names are trademarks or registered trademarks of
their respective owners.
    


    

    
                                 ENTRUST, INC.
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
    

    
                                                              Three Months
                                                                 Ended
                                                               March 31st,
                                                             --------------
                                                             2009      2008
                                                             ----      ----
    

    
    Revenues:
      Product                                              $9,397    $9,630
      Services and maintenance                             13,239    16,208
                                                           ------    ------
    Total revenues                                         22,636    25,838
                                                           ------    ------
    

    
    Cost of revenues:
      Product                                               2,130     2,362
      Services and maintenance                              5,764     7,855
      Amortization of purchased product rights                128       345
                                                              ---       ---
    Total cost of revenues                                  8,022    10,562
                                                            -----    ------
    

    
    Total gross profit                                     14,614    15,276
                                                           ------    ------
    

    
    Operating expenses:
      Sales and marketing                                   6,535     8,703
      Research and development                              3,010     4,742
      General and administrative                            3,343     3,116
                                                            -----     -----
    Total operating expenses                               12,888    16,561
                                                           ------    ------
    

    
    Income (loss) from operations                           1,726    (1,285)
                                                            -----    ------
    

    
    Other income (expense):
      Interest income                                          23       131
      Foreign exchange gain                                    85        20
      Gain on sale of long-term strategic investments          41        18
                                                               --        --
    Total other income (expense)                              149       169
                                                              ---       ---
    

    
    Income (loss) before income taxes                       1,875    (1,116)
    

    
    Provision for income taxes                                121        64
                                                              ---        --
    

    
    Net income (loss)                                      $1,754   $(1,180)
                                                           ------   -------
    

    
    Weighted average common shares used
      Basic                                                61,455    61,165
      Diluted                                              61,455    61,165
    

    
    Net income (loss) per share
      Basic                                                 $0.03    ($0.02)
      Diluted                                               $0.03    ($0.02)
    



    
                                 ENTRUST, INC.
                   UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                                (in thousands)
    


    
                                                      March 31,  December 31,
                                                        2009         2008
                                                        ----         ----
    ASSETS
    

    
      Cash and marketable investments                 $26,572      $24,312
      Accounts receivable, net of allowance for
       doubtful accounts                               17,633       18,419
      Other current assets                              3,095        3,262
      Property and equipment, net                       1,250        1,290
      Purchased product rights and other
       purchased intangible assets, net                 9,244        9,622
      Goodwill                                         60,214       60,214
      Long-term strategic and equity
       investments                                         46           46
      Other long-term assets, net                         810          881
                                                          ---          ---
    

    
        Total assets                                 $118,864     $118,046
                                                     ========     ========
    


    
    LIABILITIES AND SHAREHOLDERS' EQUITY
    

    
      Accounts payable and accruals                   $13,771      $15,258
      Accrued restructuring charges                    12,244       13,612
      Deferred revenue                                 29,485       27,756
      Long-term liabilities                               755          772
                                                          ---          ---
    

    
        Total liabilities                              56,255       57,398
    

    
      Shareholders' equity                             62,609       60,648
                                                       ------       ------
    

    
        Total liabilities and shareholders'
         equity                                      $118,864     $118,046
                                                     ========     ========
    




    
    The following supplemental tables provide non-GAAP financial measures used
    by the company's management to evaluate operational results.  The company
    believes this information may be useful to investors.   In addition to
    disclosing financial results calculated in accordance with U.S. generally
    accepted accounting principles (GAAP), the company's earnings release
    contains non-GAAP financial measures that exclude the income statement
    effects of share-based compensation, amortization of purchase product
    rights and other purchased intangibles, write-down of long-term assets and
    non recurring restructuring and impairment charges, as well as adjusting
    for currency effects to maintain a constant currency with the prior year's
    results. The non-GAAP financial measures disclosed by the company should
    not be considered a substitute for, or superior to, financial measures
    calculated in accordance with GAAP, and the financial results calculated
    in accordance with GAAP and reconciliations to those financial statements
    should be carefully evaluated. The non-GAAP financial measures used by the
    company may be calculated differently from, and therefore may not be
    comparable to, similarly titled measures used by other companies.
    

    
    Set forth below are reconciliations of the non-GAAP financial measures to
    the most directly comparable GAAP financial measures.
    

    
    For additional information regarding these non-GAAP financial measures,
    see the Form 8-K dated April 28, 2009 that Entrust has filed with the
    Securities and Exchange Commission.
    



    
                                  ENTRUST, INC.
                                 SUPPLEMENTAL
                 RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
                      (in thousands, except per share data)
    

    
                                                 Three Months Ended
                                                     March 31st,
                                                 -----------------
                                                 2009         2008
                                                 ----         ----
    Reconciliation of net income (loss) per
     GAAP to Non-GAAP income:
    GAAP net income (loss)                     $1,754      $(1,180)
        Adjustments for share-based
         compensation expense:
              Cost of revenues                     28           91
              Sales and marketing                  18          318
              Research and development             26          122
              General and administrative          178          399
        Amortization of other purchased
         intangibles:
              Cost of revenues                     39           38
              Sales and marketing                 211          211
        Amortization of purchased product
         rights                                   128          345
                                                  ---          ---
    

    
    Non-GAAP income                            $2,382         $344
                                               ------         ----
    


    
    Reconciliation of net income (loss) per
     diluted share according to GAAP to
     Non-GAAP income per diluted share:
    

    
    GAAP net income (loss) per diluted share    $0.03       ($0.02)
                                                -----       -------
        Adjustments for share-based
         compensation expense                    0.01         0.02
        Amortization of other purchased
         intangibles                              -            -
        Amortization of purchased product
         rights                                   -           0.01
                                                  ---         ----
                                                 0.01         0.03
                                                 ----         ----
    

    
    Non-GAAP income per diluted share           $0.04        $0.01
                                                -----        -----
    

    
    Weighted average common shares used        61,455       61,165
                                               ------       ------
    

    
    Reconciliation of net cash flow from
     operating activities per GAAP to Non-GAAP
     cash flow from operations before the net
     change in restructuring accruals:
    

    
    GAAP net cash flow from operating
     activities                                $3,048       $2,488
        Adjustments to exclude the effects of:
                     Net change in accrued
                      restructuring charges     1,368        1,404
                                                -----        -----
    

    
    Non-GAAP cash flow from operations
     before the net change in restructuring
     accruals                                  $4,416       $3,892
                                               ------       ------
    



    
                                             Three Months   Percentage Change
                                                 Ended           Versus:
                                               March 31st,
                                                 2009       Q1, 2008  Q4, 2008
                                                 ----       --------  --------
                                             (in millions)
    Reconciliation of  financial measures
     after adjusting for constant currency:
    

    
    Product revenues, as per GAAP                $9.4          -2%
        Adjustment to exclude the effect of
         currency changes from the prior year     1.2          12%
                                                  ---          ---
    

    
    Non GAAP product revenues, adjusting
     for currency                               $10.6          10%
                                                -----          ---
    

    
    Services and maintenance revenues,
     as per GAAP                                $13.2         -18%
        Adjustment to exclude the effect of
         currency changes from the prior year     1.5           9%
                                                  ---           --
    

    
    Non-GAAP services and maintenance
     revenues, adjusting for currency           $14.7          -9%
                                                -----          ---
    

    
    Total revenues, as per GAAP                 $22.6         -12%
        Adjustment to exclude the effect of
         currency changes from the prior year     2.7          10%
                                                  ---          ---
    

    
    Non-GAAP total revenues, adjusting for
     currency                                   $25.3          -2%
                                                -----          ---
    

    
    Deferred revenue, as per GAAP               $29.5           2%        6%
        Adjustment to exclude the effect of
         currency changes from the prior year     3.9          14%        1%
                                                  ---          ---        --
    

    
    Non-GAAP deferred revenue, adjusting for
     currency                                   $33.4          16%        7%
                                                -----          ---        --




    




For further information:

For further information: Investor Relations, David Rockvam of Entrust,
Inc., +1-972-728-0424, david.rockvam@entrust.com, or Media Relations, David
J.Chamberlin, +1-214-669-7299, david.chamberlin@mslworldwide.com, for Entrust,
Inc. Web Site: http://www.entrust.com

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