2008-07-24 02:00:00
VASCO Reports Results for Second Quarter and First Six Months of 2008.
Revenues for the second quarter 2008 increased 9% over second quarter 2007
and were the highest in the Company's history; Operating income decreased
4% over second quarter 2007. Updated guidance for full-year 2008 provided.
Financial results for the second quarter of 2008 to be discussed on
conference call today at 10:00 a.m. E.D.T.
OAKBROOK TERRACE, Ill. and ZURICH, Switzerland, July 24
/EMWNews/ -- VASCO Data Security International, Inc. (Nasdaq:
VDSI) (http://www.vasco.com) today reported financial results for the
second quarter and six months ended June 30, 2008.
Revenue for the second quarter of 2008 increased 9% to $35.4 million
from $32.4 million for the second quarter of 2007, and for the first six
months of 2008, increased 9% to $64.3 million from $58.8 million for the
first six months of 2007.
Net income for the second quarter of 2008 was $7.5 million, or $0.20
per diluted share, an increase of $0.6 million, or 9%, from $6.9 million,
or $0.18 per diluted share, for the comparable period in 2007. Net income
for the first six months of 2008 was $12.4 million, or $0.32 per diluted
share, an increase of $0.5 million, or 5%, from $11.8 million, or $0.31 per
diluted share, for the comparable period in 2007.
Other Financial Highlights:
-- Gross profit was $25.4 million, or 72% of revenue, for the second
quarter of 2008 and $45.4 million, or 71% of revenue, for the first six
months of 2008. Gross profit was $20.7 million, or 64% of revenue for the
second quarter of 2007 and $38.2 million, or 65% of revenue, for the first
six months of 2007.
-- Operating expenses for the second quarter and first six months of
2008 were $16.4 million and $30.6 million, respectively, an increase of 46%
from $11.2 million reported for the second quarter of 2007 and an increase
of 40% from $21.9 million reported for the first six months of 2007.
Operating expenses for the second quarter and first six months of 2008
included $0.8 million and $1.5 million, respectively, related to
stock-based incentives.
-- Operating income for the second quarter and first six months of 2008
was $9.0 million and $14.9 million, respectively, a decrease of $0.4
million, or 4%, from $9.4 million reported for the second quarter of 2007
and a decrease of $1.4 million, or 9%, from $16.3 million reported for the
first six months of 2007. Operating income, as a percentage of revenue, for
the second quarter and first six months of 2008 was 26% and 23%,
respectively, compared to 29% and 28% for the comparable periods in 2007.
-- Earnings before interest, taxes, depreciation and amortization
(EBITDA) was $9.9 million and $16.9 million for the second quarter and
first six months of 2008, respectively, a decrease of 3% from $10.2 million
reported for the second quarter of 2007 and a decrease of 5% from $17.7
million reported for the first six months of 2007.
-- Net cash balances, cash balances less borrowing under VASCO's line
of credit, at June 30, 2008 totaled $42.1 million compared to $47.8 million
and $38.8 million at March 31, 2008 and December 31, 2007, respectively.
Operational and Other Highlights:
-- VASCO won 516 new customers in Q2 2008 (79 new banks and 437 new
enterprise security customers). For the first six months of 2008,
VASCO won 1,107 new customers (150 banks and 957 enterprise security
customers).
-- Banco Itau (Brazil) secures more than 1.6 million end users with VACMAN
Controller/Digipass GO3
-- Independent Bankers' Bank (U.S.) secures online banking with VACMAN
Controller/Digipass GO6
-- Mizuho Bank (Japan), Intesa Sanpaolo (Italy) and Banco Itau (Brazil)
receive VASCO's Market Vision Award
-- Digipass integrated into SonicWall SSL-VPN
-- VASCO opens subsidiary in Mumbai India
-- VASCO expands US Channel Partner Program
-- VASCO ranks 5th in Fortune Small Business Top 100 and 14th in
BusinessWeek's Hot Growth Companies top 50.
Guidance for full-year 2008:
VASCO updated its full-year 2008 guidance as follows: -- Revenue growth of 15% to 25% for the full-year 2008 over full-year
2007, a reduction from its previous guidance of 10 percentage points in
each end of the range,
-- Gross margins as a percentage of revenue of 60% to 68% for full-year
2008, which is unchanged from previous guidance, and
-- Operating margins as a percentage of revenue of 20% to 25% for full-
year 2008, which is also unchanged from previous guidance.
"We are pleased with the progress we saw in the business in Q2," stated
T. Kendall Hunt, Chairman & CEO. "Not only did we report a record level of
revenues for a quarter, but we also increased our deferred revenues and saw
a strong order flow throughout the quarter. The current order flow
reinforces our belief that our growth rates over 2007 will accelerate in
the second half of the year. We are, however, reducing our revenue guidance
for two primary reasons. One is to more fully consider the impact of our
business strategies where a larger portion of our business activity relates
to recurring software revenue, which may be deferred and recognized in
future periods. The second is to reflect a more conservative outlook for
the full year given the uncertainty of the world economies."
"We are continuing to make investments in our infrastructure and
continuing our aggressive hiring plan," said Jan Valcke, VASCO's President
and COO. "Our business mix is evolving favorably, as expressed by the
increase in gross margins. It is our goal to accelerate our growth in
enterprise security and other non-traditional markets while strengthening
our position in the banking sector."
Cliff Bown, Executive Vice President and CFO added, "The continued
strong operating performance has allowed us to both invest strongly in the
business and strengthen our balance sheet. While our net cash balance
decreased $5.7 million or 12% during the quarter, our working capital
increased $7.8 million or 13% from March 31, 2008. Days Sales Outstanding
(DSO) in net accounts receivable increased to approximately 83 days at June
30, 2008 from 67 days and 76 days at March 31, 2008 and December 31, 2007,
respectively."
Conference Call Details
In conjunction with this announcement, VASCO Data Security
International, Inc. will host a conference call today, July 24, 2008, at
10:00 a.m. EDT - 16:00h CET. During the Conference Call, Mr. Ken Hunt, CEO,
Mr. Jan Valcke, President and COO, and Mr. Cliff Bown, CFO, will discuss
VASCO's results for the second quarter 2008.
To participate in this Conference Call, please dial one of the
following numbers:
USA/Canada: 888 562 3356
International: +1 973 582 2700
Participants should reference Conference ID - 54791512#.
The Conference Call is also available in listen-only mode on
http://www.vasco.com. Please log on 15 minutes before the start of the
Conference Call in order to download and install any necessary software.
The recorded version of the Conference Call will be available on the VASCO
website 24 hours a day.
VASCO Data Security International, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
Net revenue $35,409 $32,442 $64,337 $58,847
Cost of goods sold 10,007 11,755 18,895 20,630
Gross profit 25,402 20,687 45,442 38,217
Operating
costs:
Sales and
marketing 9,036 6,659 16,737 12,749
Research and
development 2,966 2,076 5,656 3,999
General and
administrative 4,230 2,249 7,765 4,636
Amortization of
purchased intangible
assets 124 253 396 511
Total
operating
costs 16,356 11,237 30,554 21,895
Operating
income 9,046 9,450 14,888 16,322
Interest
income, net 277 80 534 138
Other income
(expense), net (43) (8) 217 (45)
Income before
income taxes 9,280 9,522 15,639 16,415
Provision for
income taxes 1,822 2,666 3,284 4,596
Net income $7,458 $6,856 $12,355 $11,819
Net income per
share:
Basic $0.20 $0.19 $0.33 $0.32
Diluted $0.20 $0.18 $0.32 $0.31
Weighted average common
shares outstanding:
Basic 37,130 36,879 37,120 36,722
Diluted 38,198 38,228 38,253 38,115
VASCO Data Security International, Inc.
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2008 2007
ASSETS (unaudited)
Current assets:
Cash and equivalents $42,076 $38,833
Accounts receivable, net of
allowance for doubtful accounts 32,384 25,721
Inventories 10,833 7,076
Prepaid expenses 1,550 1,712
Foreign sales tax receivable 7,661 4,919
Deferred income taxes 258 476
Other current assets 175 180
Total current assets 94,937 78,917
Property and equipment, net 3,000 2,140
Goodwill, net of accumulated amortization 15,361 14,319
Intangible assets, net of accumulated
amortization 2,109 2,295
Other assets, net of accumulated
amortization 3,647 3,005
Total assets $119,054 $100,676
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 6,395 7,757
Deferred revenue 6,200 5,608
Accrued wages and payroll taxes 5,493 5,330
Income taxes payable 5,283 4,008
Other accrued expenses 4,703 3,776
Total current liabilities 28,074 26,479
Deferred warranty 226 309
Accrued compensation 723 1,281
Deferred revenue 1,206 457
Deferred tax liability 542 611
Total liabilities 30,771 29,137
Stockholders' equity:
Common stock 37 37
Additional paid-in capital 65,597 64,734
Accumulated income 12,920 565
Accumulated other comprehensive income 9,729 6,203
Total stockholders' equity 88,283 71,539
Total liabilities and stockholders'
equity $119,054 $100,676
Reconciliation of Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA") to net income:
Three months Six months
ended June 30, ended June 30,
2008 2007 2008 2007
(in thousands, unaudited) (in thousands, unaudited)
EBITDA $9,896 $10,207 $16,917 $17,761
Interest income, net 277 80 534 138
Provision for income
taxes (1,822) (2,666) (3,284) (4,596)
Depreciation and
amortization (893) (765) (1,812) (1,484)
Net income $7,458 $6,856 $12,355 $11,819
EBITDA is a non-GAAP financial measure within the meaning of applicable
U.S. Securities and Exchange Commission rules and regulations. We use
EBITDA as a measure of performance, a simplified tool for use in
communicating our performance to investors and analysts and for comparisons
to other companies within our industry. As a performance measure, we
believe that EBITDA presents a view of our operating results that is most
closely related to serving our customers. By excluding interest, taxes,
depreciation and amortization we are able to evaluate performance without
considering decisions that, in most cases, are not directly related to
meeting our customers' requirements and were either made in prior periods
(e.g., depreciation and amortization), or deal with the structure or
financing of the business (e.g., interest) or reflect the application of
regulations that are outside of the control of our management team (e.g.,
taxes). Similarly, we find that the comparison of our results to those of
our competitors is facilitated when we do not need to consider the impact
of those items on our competitors' results.
EBITDA should be considered in addition to, but not as a substitute
for, other measures of financial performance reported in accordance with
accounting principles generally accepted in the United States. While we
believe that EBITDA, as defined above, is useful within the context
described above, it is in fact incomplete and not a measure that should be
used to evaluate our full performance or our prospects. Such an evaluation
needs to consider all of the complexities associated with our business
including, but not limited to, how past actions are affecting current
results and how they may affect future results, how we have chosen to
finance the business and how regulations and the other aforementioned items
affect the final amounts that are or will be available to shareholders as a
return on their investment. Net income determined in accordance with U.S.
GAAP is the most complete measure available today to evaluate all elements
of our performance. Similarly, our Consolidated Statement of Cash Flows,
which will be filed as part of our annual report on Form 10-K, provides the
full accounting for how we have decided to use resources provided to us
from our customers, lenders and shareholders.
About VASCO: VASCO is a leading supplier of strong authentication and
e-signature solutions and services specializing in Internet Security
applications and transactions. VASCO has positioned itself as a global
software company for Internet Security serving a customer base of more than
7,600 companies in more than 100 countries, including more than 1,150
international financial institutions. VASCO's prime markets are the
financial sector, enterprise security, e-commerce and e-government.
Forward Looking Statements
Statements made in this news release that relate to future plans,
events or performances are forward-looking statements. Any statement
containing words such as "believes," "anticipates," "plans," "expects," and
similar words, is forward-looking, and these statements involve risks and
uncertainties and are based on current expectations. Consequently, actual
results could differ materially from the expectations expressed in these
forward-looking statements.
Reference is made to our public filings with the U.S. Securities and
Exchange Commission for further information regarding VASCO and our
operations.
For more information contact:
Jochem Binst, +32 2 609 97 40, [email protected]
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