Sandvine reports Q4 and fiscal year 2011 results

WATERLOO, ON, Jan. 12, 2012 /CNW/ - Sandvine, (TSX: SVC) (AIM: SAND) a leading provider of intelligent network policy control solutions for fixed and mobile operators, today reported revenue of $20.6 million and a GAAP net loss of 3.6 million (non-GAAP1 loss of $2.8 million) for its fourth quarter of 2011. Fiscal year 2011 revenue was $89.3 million and the GAAP net loss was 5.8 million (non-GAAP1: $2.2 million loss). All results are reported in U.S. dollars.

Q4 2011 highlights:

  • Revenue by access technology market: DSL 21% (FY '11: 41%); wireless 37% (FY '11: 34%); cable 40% (FY '11: 23%); other 2% (FY '11: 2%)
  • Revenue by geography: NA 51% (FY '11: 40%); EMEA 23% (FY '11: 30%); APAC 10% (FY '11: 19%); CALA 16% (FY '11: 11%)
  • Revenue by sales channel: reseller 44% (FY'11: 54%) direct 56% (FY'11: 46%)
  • 7 new customers: 4 wireless; 2 DSL ; 1 fibre-to-the-home.
  • Awarded $4.5 million expansion order for Network Analytics by Tier 1 US MSO
  • Won industry award for "Best Implementation of Tiered Data Pricing" for its Usage Management product and another industry award for its Network Analytics product
  • David Thomson, strategy consultant and bestselling author of Blueprint to a Billion joined Sandvine's Board of Directors

"We added 44 new customers in 2011 and have the largest and most diversified customer base in our industry. We also offer the broadest portfolio of Network Policy Control solutions in the market. In 2012 our goal is to return to revenue growth and profitability by leveraging the value of our newest solutions for existing customers and continuing to add new customers across markets," said Dave Caputo, Sandvine's President and CEO.

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

                   
Millions of dollars, except per share data and where
otherwise indicated
Q4
2011
  Q3
2011
  Change   Q4
2010
  Change
Revenue 20.6   25.6   -19.4%   24.2   -14.7%
Gross Margin percent 72%   76%   -4pp   72%   Nil
R&D, SG&A 15.8   16.6   -4.5%   14.7   7.6%
Net Income (Loss) -3.6   0.5   -   0.6   -
Diluted Earnings (Loss) Per Share -0.026   0.004   -   0.004   -
                   
Non-GAAP1 Income (Loss) -2.8   1.5   -   1.4   -
Non-GAAP1 Diluted Income (Loss) Per Share -0.020   0.010   -   0.010   -

Sandvine's cash, cash equivalents and short term investments balance at the end of the fourth quarter remained strong at $74 million (August 31, 2011: $75.1 million).

CONFERENCE CALL
The Company will discuss the financial results and business outlook on a conference call at 8:30 a.m. Eastern time (1:30 BST) today. A webcast will be available on Sandvine's website.

Local dial-in number
Toll-free North America
Toll-free United Kingdom
416 644 3415
877 974 0445
0800 358 5256

A replay of the call will be available at 416-640-1917 or toll-free at 877-289-8525 (passcode 4499834#) from approximately 10:30 a.m. Eastern time today through January 19.

ABOUT SANDVINE
Sandvine's network policy control solutions focus on protecting and improving the quality of experience on the Internet.

Our award-winning network equipment and software helps DSL, FTTx, cable, fixed wireless and mobile operators better understand network traffic, manage network congestion, create new services and revenues, mitigate traffic that is malicious or undesirable to subscribers, deliver QoS-prioritized multimedia services and increase subscriber satisfaction. With well over 200 service provider customers in more than 85 countries serving hundreds of millions of broadband and mobile data subscribers, Sandvine is enhancing the Internet experience worldwide. For more information, please visit 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.  The Company's reseller partners may 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 majority of the Company's operating expenses are denominated in Canadian dollars, U.S. dollars and New Israeli Shekels. The Company's earnings are impacted by fluctuations in the exchange rates between the U.S. dollar and these currencies.

Table 1

1. Non-GAAP Financial Measures

The following table provides a reconciliation of GAAP net income (loss) and related per share amounts to non-GAAP net income (loss) and the related per share amounts for the periods indicated.  These non-GAAP financial measures which are used internally by management to evaluate the Company's ongoing performance exclude the impact of stock based compensation, amortization of intangible assets acquired through business acquisitions and goodwill and intangible impairment expenses (collectively referred to as "Excluded Expenses").  The Company provides these non-GAAP financial measures as it is the Company's view that the Excluded Expenses are either (i) not part of its normal day-to-day operations 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.  Non-GAAP net income (loss) is not recognized under Canadian GAAP and does not have a standardized meaning prescribed by Canadian GAAP.  Therefore it is unlikely to be comparable to similarly titled measures reported by other issuers. Non-GAAP financial measures should be considered in the context of the Company's GAAP results.

             
  Three month period ended Twelve month period ended
  November 30
2011
$
August 31
2011
$
November 30
2010
$
November 30
2011
$
November 30
2010
$
  Amounts in US$ thousands
           
Net income (loss) (3,635) 522 603 (5,763) 4,713
           
Excluded Expenses          
Stock based compensation expense 650 752 631 2,760 2,631
Amortization of intangible assets acquired through business acquisitions 185 185 187 754 1,072
Intangible impairment - - - - 643
Net income (loss) excluding the impact of Excluded Expenses (2,800) 1,459 1,421 (2,249) 9,059

           
  Three month period ended Twelve month period ended
  November 30
2011
$
August 31
2011
$
November 30
2010
$
November 30
2011
$
November 30
2010
$
           
Diluted earnings (loss) per share (0.026) 0.004 0.004 (0.042) 0.033
Impact on diluted earnings (loss) per share of Excluded Expenses 0.006 0.006 0.006 0.026 0.034
Diluted earnings (loss) per share excluding the impact of Excluded Expenses (0.020) 0.010 0.010 (0.016) 0.068
           
           

Sandvine Corporation
Consolidated Balance Sheets
As at November, 2011
(in U.S. dollars, amounts in thousands)

  2011
$
2010
$
Assets   Restated
     
Current assets    
Cash and cash equivalents 2,952 87,949
Short term investments 71,030 -
Accounts receivable 28,194 25,485
Inventory 18,230 11,268
Other 3,586 3,201
  123,992 127,903
     
Non current assets    
Plant and equipment 11,942 12,341
Intangible assets 5,454 5,125
Other assets 511 511
  17,907 17,977
     
  141,899 145,880
     
Liabilities    
     
Current liabilities    
Accounts payable and accrued liabilities 10,688 12,005
Current portion of deferred revenue 10,269 10,257
  20,957 22,262
     
Non current liabilities    
Deferred revenue 913 703
     
  21,870 22,965
     
Shareholders' equity    
     
Share capital 120,711 119,570
Contributed surplus 12,358 10,007
Accumulated other comprehensive income 19,603 20,218
Deficit (32,643) (26,880)
  120,029 122,915
     
  141,899 145,880
     

Sandvine Corporation
Consolidated Statements of Operations
For the three and twelve month periods ended November 30, 2011
(in U.S. dollars, amounts in thousands, except share and per share data)

  (unaudited)
Three month period ended
Twelve month period ended
  November 30
2011
$
November 30
2010
$
November 30
2011
$
November 30
2010
$
    Restated   Restated
Revenue        
Product 13,407 18,658 64,085 70,442
Service 7,190 5,500 25,254 19,217
  20,597 24,158 89,339 89,659
Cost of sales        
Product 3,976 5,274 16,493 18,526
Service 1,890 1,549 6,605 5,273
  5,866 6,823 23,098 23,799
         
Gross margin 14,731 17,335 66,241 65,860
         
Expenses        
Sales and marketing 5,285 5,285 20,252 18,682
Research and development 7,748 7,033 31,669 25,093
General and administrative 2,776 2,380 10,782 8,560
Stock based compensation 650 631 2,760 2,631
Amortization of intangible assets 552 345 1,998 1,563
Depreciation 1,324 1,232 4,482 4,295
Intangible impairment - - - 643
  18,335 16,906 71,943 61,467
Income (loss) from operations (3,604) 429 (5,702) 4,393
         
Interest and other income 35 222 129 465
Income (loss) before provision for income taxes (3,569) 651 (5,573) 4,858
         
Provision for income taxes        
Current 66 48 190 145
         
Net income (loss) for the period (3,635) 603 (5,763) 4,713
         
Earnings (loss) per share        
Basic (0.026) 0.004 (0.042) 0.035
Diluted (0.026) 0.004 (0.042) 0.033
Basic weighted average number of shares outstanding 137,802,512 136,724,475 137,566,098 136,256,258
Diluted weighted average number of shares outstanding 137,802,512 141,248,727 137,566,098 140,715,500

Sandvine Corporation
Consolidated Interim Statements of Cash Flows
For the three and twelve month periods ended November 30, 2011
(in U.S. dollars, amounts in thousands)

  (unaudited)
Three month period ended
Twelve month period ended
         
  November 30
2011
$
November 30
2010
$
Restated
November 30
2011
$
November 30
2010
$
Restated
Cash provided by (used in)        
         
Operating activities        
Net income (loss) for the year (3,635) 603 (5,763) 4,713
Items not affecting cash        
  Amortization of intangible assets 552 345 1,998 1,563
  Depreciation 1,363 1,322 4,678 4,615
  Unrealized foreign exchange loss 286 107 180 279
  Stock-based compensation 650 631 2,760 2,631
  Intangible impairment     - 643
  Other (27) - (90) -
  (811) 3,008 3,763 14,444
         
         
Changes in non-current balances 64 271 210 (45)
Changes in non-cash working capital balances 367 (480) (12,102) (3,627)
         
  (380) 2,799 (8,129) 10,772
         
Investing activities        
Purchase of plant, equipment and intangible software assets (774) (2,426) (6,603) (7,313)
Purchase of short term investments (8,245) (203) (243,913) (79,871)
Sale of short term investments 10,502 82,597 172,864 161,326
         
  1,483 79,968 (77,652) 74,142
         
Financing activities        
Proceeds from the issuance of share capital 183 222 833 652
         
Effect of foreign exchange gain on cash and cash equivalents (130) 188 (49) 165
         
Net increase (decrease) in cash during year 1,156 83,177 (84,997) 85,731
         
Cash and cash equivalents - beginning of year 1,796 4,772 87,949 2,218
         
Cash and cash equivalents - end of year 2,952 87,949 2,952 87,949
         
         
Cash and cash equivalents are represented by 28 9,334 28 9,334
Balances with banks 2,924 78,615 2,924 78,615
Cash equivalents







 

SOURCE Sandvine Inc.

For further information:

INVESTOR RELATIONS CONTACT
Rick Wadsworth
Sandvine
+1 519 880 2400 ext. 3503
rwadsworth@sandvine.com
MEDIA CONTACT
Sacha DeGroot
Sandvine
+1 519 880 2232
sdegroot@sandvine.com
AIM NOMAD
Andrew Chubb/Simon
Bridges
Canaccord Adams Limited
+44 0207 050 6500

 

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