Sandvine reports Q3 2013 results

WATERLOO, ON, Oct. 3, 2013 /CNW/ - Sandvine, (TSX:SVC) a leading provider of intelligent network policy control solutions for fixed and mobile operators, today reported $27.2 million in revenue for its third quarter of 2013, non-IFRS income of $5.1 million and net income of $4.7 million. All results are reported in U.S. dollars under International Financial Reporting Standards (IFRS), unless otherwise specified.

Other Q3 2013 highlights:

  • Revenue growth: up 25% compared to Q3 2012, and up 25% year-to-date
  • Revenue by access technology market: wireless 39%; DSL 32%; cable 29%
  • Revenue by geography: EMEA 40%; NA 37%; APAC 12%; CALA 12%
  • Revenue by sales channel: reseller 75%; direct 25%
  • Gross margin: 76%
  • Cash: Cash, cash equivalents and short-term investments balance: $91.4 million
  • Major wins: Announced over $7 million in expansion orders from Tier 1 operators, including a North American converged operator and two European mobile properties that belong to a major multinational operator group
  • Customers: Won eight new service provider customers, including two new EMEA customers placing initial orders totaling more than $4 million, and named C Spire, one of the top 10 wireless operators in the US, as a customer
  • Products: Launched the Service Delivery Engine version 7, a 3GPP Release 11-compliant PCRF, and announced new relationships with Dell and Juniper that demonstrate the Company's first-mover advantage in Software Defined Networking and Network Functions Virtualization for the network policy control space.

"We are pleased to have recorded another strong quarter and believe that these results solidify Sandvine's position as the leader in the best-of-breed network policy control market," said Dave Caputo, Sandvine's President and CEO. "This represents our fourth consecutive quarter of year-over-year revenue growth, profitability, and growth in our cash and short term investments balance."

FINANCIAL HIGHLIGHTS (All amounts are in U.S. dollars)                    
Millions of dollars, except per share data and where
otherwise indicated
  Q3
2013
  Q3
2012
  Change   Q2
2013
  Change
Revenue   27.2   21.8   25%   23.5   15%
Gross Margin percent   76%   70.0%   6pp   74%   2pp
Expenses   15.8   16.8   -6%   14.3   11%
Net Income (Loss)   4.7   (0.9)       0.9   422%
Diluted Earnings (Loss) Per Share   0.033   (0.006)       0.006   450%
                     
Non-IFRS Income (Loss)1   5.1   (0.4)       1.4   266%
Non-IFRS Diluted Earnings (Loss) Per Share1   0.036   (0.003)       0.010   260%
1 See Table 1 below regarding non-IFRS financial measures

Please join Sandvine at the SDN & OpenFlow World Congress, October 15-18 in Bad Homburg, Frankfurt, Germany, where we will discuss how extending OpenFlow with subscriber and application awareness enables an SDN architecture to effectively support complex network service chaining.

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       (888) 771-4371, confirmation number 35727243
Webcast       www.sandvine.com/investors


A replay of the call will be available at (888) 843-7419 (passcode 35727243#) from approximately 11:00 a.m. Eastern time on the day of the call through October 13.

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 250 networks in over 90 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   Nine month period ended
  August 31
2013
$
  May 31
2013
$
  August 31
2012
$
  August 31
2013
$
  August 31
2012
$
   
  Amounts in US$ thousands
Net income (loss) 4,652   892   (851)   7,242   (11,504)
  Adjustment for                  
     Stock based compensation expense 457   505   437   1,481   1,476
    Amortization of intangible assets acquired
through business acquisitions
-   -   61   -   431
Non-IFRS Net income (loss) 5,109   1,397   (353)   8,723   (9,597)
                   
  Three month period ended   Nine month period ended
  August 31
2013
$
  May 31
2013
$
  August 31
2012
$
  August 31
2013
$
  August 31
2012
$
                   
Diluted earnings (loss) per share 0.033   0.006   (0.006)   0.051   (0.083)
Impact on diluted earnings (loss) per share of Non-
     IFRS measures
0.003   0.004   0.003   0.011   0.014
Non-IFRS Diluted earnings (loss) per share 0.036   0.010   (0.003)   0.062   (0.069)




Sandvine Corporation
Consolidated Statements of Financial Position
(in thousands of United States dollars, except share and per share data) (unaudited)
   
      As at
  August 31,
2013
$
November 30,
2012
$
Assets    
     
Current assets    
Cash and cash equivalents   7,549 3,957
Short term investments 83,809 70,679
Accounts receivable  23,165 32,169
Inventory  8,039 6,378
Grant receivable  6,099 859
Other current assets 3,363 2,009
  132,024 116,051
Non current assets    
Plant and equipment 9,538 10,654
Intangible assets 3,811 4,443
Grant receivable - 4,343
Deferred tax asset 212 212
Other assets 511 511
  14,072 20,163
     
  146,096 136,214
     
Liabilities    
     
Current liabilities    
Trade and other payables 10,814 10,453
Current portion of deferred revenue 13,922 9,350
  24,736 19,803
Non current liabilities    
Deferred revenue 879 503
Other non current liabilities 1,245 3,808
  2,124 4,311
     
  26,860 24,114
Shareholders' equity    
     
Share capital  120,673 120,626
Contributed surplus 15,800 14,652
Accumulated comprehensive income (loss)  (519) 113
Retained deficit (16,718) (23,291)
  119,236 112,100
     
  146,096 136,214




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
    For the nine month period
ended
                 
  August 31,
2013
$
  August 31,
2012
$
    August 31,
2013
$
  August 31,
2012
$
                 
Revenue                
Product 17,838   14,627     51,337   38,632
Service 9,345   7,166     24,412   21,833
  27,183   21,793     75,749   60,465
Cost of sales                
Product 3,607   4,088     11,506   13,992
Service 2,932   2,457     8,308   6,737
  6,539   6,545     19,814   20,729
                 
Gross margin 20,644   15,248     55,935   39,736
                 
Expenses                
Sales and marketing 7,238   6,779     21,480   20,008
Research and development 5,815   7,297     16,183   22,398
General and administrative 2,786   2,748     8,484   8,952
Other losses, net 7   10     79   567
  15,846   16,834     46,226   51,925
                 
Income (loss) from operations 4,798   (1,586)     9,709   (12,189)
                 
Finance income (costs), net                
Finance income 43   34     113   106
Finance costs (63)   (125)     (304)   (379)
Foreign exchange losses (18)   (182)     (67)   (308)
Other finance gains, net -   1,083     -   1,229
Finance income (costs), net (38)   810     (258)   648
                 
Income (loss) before provision for
     income taxes
4,760   (776)     9,451   (11,541)
                 
Provision for (recovery of) income taxes                
Current 108   75     2,209   175
Deferred -   -     -   (212)
Provision for (recovery of) income taxes 108   75     2,209   (37)
                 
Net income (loss) for the period 4,652   (851)     7,242   (11,504)
                 
Earnings (loss) per share                
Basic earnings (loss) per share 0.034   (0.006)     0.052   (0.083)
Diluted earnings (loss) per share 0.033   (0.006)     0.051   (0.083)
                 




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
    For the nine month period
ended
  August 31,
2013
$
  August 31,
2012
$
    August 31,
2013
$
  August 31,
2012
$
Cash provided by (used in)                
                 
Operating activities                
Net income (loss) for the period 4,652   (851)     7,242   (11,504)
Items not affecting cash                
   Amortization of intangible assets 287   348     850   1,414
   Depreciation of plant and equipment 1,150   1,205     3,351   3,481
   Unrealized foreign exchange (gains) (27)   (99)     (108)   (18)
  Finance costs 63   125     304   379
  Other finance (gains) -   (1,083)     -   (1,229)
   Stock-based compensation 457   437     1,481   1,476
  Deferred tax recovery -   -     -   (212)
   Other (6)   (20)     164   554
  6,576   62     13,284   (5,659)
                 
Changes in non-cash working capital balances (1,518)   (3,218)     9,311   10,907
  5,058   (3,156)     22,595   5,248
                 
Investing activities                
Purchase of plant, equipment and intangible software                
  assets (905)   (704)     (2,727)   (3,785)
Purchase of short term investments (4,546)   (38)     (13,129)   (5,879)
Sale of short term investments -   -     -   5,275
  (5,451)   (742)     (15,856)   (4,389)
                 
Financing activities                
Repayment of government grants -   -     (2,270)   (2,324)
Proceeds from the issuance of share capital 65   66     382   258
Payment to cancel warrant -   -     -   (80)
Common share repurchase (218)   -     (1,230)   -
  (153)   66     (3,118)   (2,146)
                 
Effect of foreign exchange on cash and cash                
  equivalents 4   28     (29)   (99)
                 
Net increase (decrease) in cash during period (542)   (3,804)     3,592   (1,386)
                 
Cash and cash equivalents - Beginning of period 8,091   5,370     3,957   2,952
                 
Cash and cash equivalents - End of period 7,549   1,566     7,549   1,566
                 
Cash and cash equivalents are represented by                
Balances with banks 7,549   1,566     7,549   1,566
                 

 

SOURCE: Sandvine

For further information:

INVESTOR CONTACT
Rick Wadsworth
Sandvine
+1 519 880 2400 ext. 3503
rwadsworth@sandvine.com 

MEDIA CONTACT
Dan Deeth
Sandvine
+1 519 880 2232
ddeeth@sandvine.com


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890