Bridgewater Systems Reports Financial Results for Q1 2010
- Revenue of $24.5 million for Q1 2010, an increase of 74% over prior
year
- Net earnings of $4.6 million, or $0.19 per share fully diluted,
compared with net earnings of $2.9 million, or $0.12 per share fully
diluted, in Q1 2009
- Cash and cash equivalents, and short-term investments increased to
$84.3 million
- Updates guidance for 2010
OTTAWA, April 29 /CNW/ - Bridgewater Systems (TSX: BWC), the mobile personalization company, today announced financial results for the three months ended March 31, 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.
"Current customer engagements drove significant increases in revenues and earnings in the first quarter," said Ed Ogonek, CEO of Bridgewater Systems. "Mobile service providers globally are increasingly challenged by the surge in data traffic, which is generating growing interest in our intelligent control solutions, reflected in a robust new business pipeline. We are focused on converting this interest into new customer wins during 2010, particularly outside North America, while expanding our business with current customers as they manage quickly growing mobile data traffic across 3G and 4G networks."
Financial Highlights
--------------------
- Revenue of $24.5 million for Q1 2010 represents an increase of 74%
compared with $14.0 million for Q1 2009. Product revenue for Q1 2010
was $18.9 million, an increase of 76%, compared with $10.7 million
for Q1 2009. Service and support revenue was $5.6 million for Q1 2010
compared to $3.3 million for Q1 2009, an increase of 71%.
- The increase in product revenue primarily reflects the delivery and
acceptance of the WideSpan systems for Verizon Wireless and the
advancement of revenue due to an expected transition in the Company's
business with Verizon Wireless. Going forward, the Company expects
continued license of its software and solutions by Verizon Wireless
in a software-based transaction license model as Verizon Wireless
transitions its requirements to provide for greater hardware platform
flexibility and to support increased transaction capacity.
- Q1 2010 gross margin was $16.3 million (67% of revenue) versus $10.7
million (76% of revenue) in Q1 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 Q1 2010 were $9.9 million (40% of
revenue), net of $0.4 million of investment tax credits, compared
with $8.2 million (58% of revenue) in the same period last year.
- Net earnings before income taxes rose to $5.7 million in Q1 2010,
versus $2.8 million in Q1 2009.
- Net earnings for Q1 2010 increased to $4.6 million, or $0.19 per
share fully diluted, versus $2.9 million, or $0.12 per share fully
diluted, in the prior year.
- Cash and cash equivalents, and short-term investments grew to $84.3
million, compared with $67.3 million at December 31, 2009.
Business Highlights
-------------------
- Selected by Mobily, the largest provider of mobile broadband in Saudi
Arabia, to provide the Bridgewater(R) Service Controller and Policy
Controller to manage mobile data growth across its WiMAX, and Wi-Fi
networks with plans to integrate with the HSPA network.
- Bridgewater(R) Policy Controller was deployed by a European property
of a major global mobile operator group to meet new EU mobile data
roaming legislation and empower subscribers to personalize and manage
mobile data usage.
- Extended No.1 global policy market leadership in both the overall
global policy market and in the mobile policy segment according to
Infonetics Research.
- Continued momentum in helping customers transform to 4G with five
confirmed LTE trials with major operators in Asia Pacific and North
and South America for the Bridgewater(R) EPC 500 'control-plane-in-a-
box' system. Bridgewater also showcased industry leading LTE control
plane interoperability at the Global MultiService Forum testing
event.
- Unveiled new solutions to optimize 3G networks and alleviate
congestion including Bridgewater's RAN congestion solution and mobile
data offload solutions.
Outlook
-------
With the release of its Q1 2010 results, Bridgewater updated 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 months ended March 31, 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, 2009 and Management's Discussion & Analysis of Financial Condition and Results of Operation dated March 31, 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, April 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 months ended March 31, 2010 and 2009
(expressed in Canadian dollars)
(unaudited)
-------------------------------------------------------------------------
Three months ended
------------------------------
March 31, March 31,
2010 2009
--------------- --------------
Revenue
Product $ 18,851,979 $ 10,737,290
Service and support 5,643,892 3,305,807
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24,495,871 14,043,097
Cost of sales 8,180,039 3,323,068
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Gross margin 16,315,832 10,720,029
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Expenses
Sales and marketing 4,040,311 2,932,558
Research and development 5,184,082 3,427,970
General and administration 1,025,678 1,501,276
Investment tax credit carryforwards
recognized (400,000) -
Bad debt (recovery) expense (49,929) 223,838
Stock-based compensation 115,862 75,488
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9,916,004 8,161,130
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Earnings before undernoted items 6,399,828 2,558,899
Foreign exchange loss (740,319) (3,697)
Interest and other income 72,160 230,023
Loss on disposal of property, equipment
and intangible assets (22,000) -
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Earnings before income taxes 5,709,669 2,785,225
Current income tax expense 400,000 -
Future income tax expense (recovery) 717,000 (100,000)
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NET EARNINGS AND COMPREHENSIVE EARNINGS $ 4,592,669 $ 2,885,225
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Net earnings per share - basic $ 0.19 $ 0.12
Net earnings per share - diluted $ 0.18 $ 0.12
Weighted average number of shares
outstanding - basic 24,441,881 23,107,823
Weighted average number of shares
outstanding - diluted 25,558,286 24,401,989
BRIDGEWATER SYSTEMS CORPORATION
Consolidated Balance Sheets
as at March 31, 2010 and December 31, 2009
(expressed in Canadian dollars)
(unaudited)
-------------------------------------------------------------------------
March 31, December 31,
2010 2009
--------------- --------------
CURRENT ASSETS
Cash and cash equivalents $ 76,018,916 $ 53,828,859
Short-term investments 8,232,449 13,459,190
Accounts receivable 9,831,353 24,879,197
Unbilled receivables 553,324 1,360,741
Deferred cost of sales 9,093,064 12,324,813
Prepaid expenses and other assets 3,923,485 3,229,227
Future income tax asset 3,662,000 5,113,000
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111,314,591 114,195,027
FUTURE INCOME TAX ASSET 4,437,000 3,703,000
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS 3,337,404 3,604,811
-------------------------------------------------------------------------
$ 119,088,995 $ 121,502,838
-------------------------------------------------------------------------
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CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 5,557,413 $ 9,617,441
Deferred revenue 41,199,010 44,288,403
-------------------------------------------------------------------------
46,756,423 53,905,844
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SHAREHOLDERS' EQUITY
Share capital 69,903,009 69,872,842
Contributed surplus 1,020,936 908,194
Retained Earnings (Deficit) 1,408,627 (3,184,042)
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72,332,572 67,596,994
-------------------------------------------------------------------------
$ 119,088,995 $ 121,502,838
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BRIDGEWATER SYSTEMS CORPORATION
Consolidated Statements of Cash Flows
For the three months ended March 31, 2010 and 2009
(expressed in Canadian dollars)
(unaudited)
-------------------------------------------------------------------------
Three months ended
------------------------------
March 31, March 31,
2010 2009
--------------- --------------
NET INFLOW (OUTFLOW) OF CASH RELATED
TO THE FOLLOWING ACTIVITIES:
OPERATING
Net earnings $ 4,592,669 $ 2,885,225
Items not affecting cash
Bad debt expense - 223,838
Stock-based compensation 115,862 75,488
Foreign exchange loss (gain) on cash
held in foreign currency 1,641,768 (437,144)
Loss on disposal of assets 22,000 -
Future income tax expense (recovery) 717,000 (100,000)
Amortization of property, equipment and
intangible assets 318,572 281,896
-------------------------------------------------------------------------
7,407,871 2,929,303
Changes in non-cash operating working
capital items 11,328,422 (1,687,765)
-------------------------------------------------------------------------
18,736,293 1,241,538
-------------------------------------------------------------------------
INVESTING
Receipt of short-term investments 5,226,741 -
Purchases of property, equipment and
intangible assets (158,256) (373,867)
Deferred cost of sales - 741,348
-------------------------------------------------------------------------
5,068,485 367,481
-------------------------------------------------------------------------
FINANCING
Proceeds from issuance of common shares 27,047 1,736,412
Repurchase of shares under normal course
issuer bid - (208,291)
-------------------------------------------------------------------------
27,047 1,528,121
-------------------------------------------------------------------------
Foreign exchange (loss) gain on cash held
in foreign currency (1,641,768) 437,144
-------------------------------------------------------------------------
NET CASH INFLOW 22,190,057 3,574,284
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 53,828,859 50,363,771
-------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 76,018,916 $ 53,938,055
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplementary information:
Cash on hand and bank balances $ 36,819,311 $ 9,375,368
Cash equivalents 39,199,605 44,562,687
-------------------------------------------------------------------------
Total cash and cash equivalents $ 76,018,916 $ 53,938,055
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Interest received $ 52,095 $ 226,630
BRIDGEWATER SYSTEMS CORPORATION
Consolidated Statements of Shareholders' Equity
For the three months ended March 31, 2010
(expressed in Canadian dollars)
(unaudited)
-------------------------------------------------------------------------
Common Shares Contributed
Number Amount Surplus
------ ------ -------
-------------------------------------------------------------------------
Balance at December 31,
2009 24,432,468 $ 69,872,842 $ 908,194
-------------------------------------------------------------------------
Stock-based compensation - - 115,862
Repurchase of shares under
normal course issuer bid - - -
Exercise of stock options 15,304 30,167 (3,120)
Net earnings - - -
-------------------------------------------------------------------------
Balance at March 31, 2010 24,447,772 $ 69,903,009 $ 1,020,936
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Retained Earnings Shareholders'
(Deficit) Equity
--------- ------
----------------------------------------------------------
Balance at December 31,
2009 $ (3,184,042) $ 67,596,994
----------------------------------------------------------
Stock-based compensation - 115,862
Repurchase of shares under
normal course issuer bid - -
Exercise of stock options - 27,047
Net earnings 4,592,669 4,592,669
----------------------------------------------------------
Balance at March 31, 2010 $ 1,408,627 $ 72,332,572
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For further information: Investor Relations, Kim Butler, Chief Financial Officer, Bridgewater Systems, [email protected], (613) 591-9104 extension 6023; Craig Armitage, The Equicom Group Inc., [email protected], (416) 815-0700 extension 278; Media Relations, Joanne Steinberg, Marketing Director, Bridgewater Systems, [email protected], (613) 591-9104 extension 2032
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